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Consolidation of FFEL Federal Loans for Public Service Student Loan Forgiveness

New rules mean borrowers with FFEL loans can qualify for Public Service Student Loan Forgiveness, but consolidation is a required first step.

Written By: Michael P. Lux, Esq.

Last Updated:

Affiliate Disclosure and Integrity Pledge

Temporary Forgiveness Clock Rule: The Department of Education is conducting a one-time update of IDR payment counts. Borrowers who consolidate their federal loans before June 30, 2024, can maximize progress toward PSLF and IDR forgiveness.

For many years, FFEL (Federal Family Education Loan) loans have caused headaches for borrowers seeking to qualify for PSLF (Public Service Loan Forgiveness).

FFEL loans are not technically eligible for PSLF. This has resulted in many borrowers discovering their years of public service didn’t count towards forgiveness.

Typically, the solution has been to consolidate these loans into a Direct Loan, which is eligible for PSLF. There is a major downside to doing this, however. Consolidation resets the “student loan clock,” meaning borrowers must start anew on their ten-year service requirement for forgiveness.

Fortunately, temporary changes made by the Department of Education allowed borrowers to count their time before and after consolidation towards the required ten years of service. Sadly, this temporary measure is now over — kind of.

If this all sounds confusing, you have come to the right place.

The Standard Rules for FFEL Student Loans and PSLF

Let’s start with a basic fact: Federal Family Education Loans are not eligible for Public Service Student Loan Forgiveness.

The way to fix this issue is through federal direct consolidation. Federal direct consolidation eliminates the old FFEL loan and replaces it with a new federal direct consolidated loan.

Sadly, the standard rule means that time previously spent at a PSLF-eligible job won’t count toward the required ten years.

However, there have been temporary fixes to help borrowers get around this issue.

The Expired Temporary Rules for Getting FFEL Loans to Qualify for Public Service Loan Forgiveness

Starting in late 2021, and lasting until October 31, 2022, borrowers had the opportunity to consolidate their FFEL Loans without losing their progress towards PSLF. This was part of the Limited Waiver Program. The government designed this temporary measure to help those who were excluded from PSLF due to the type of federal loans they held.

I share this information, not to rub salt in a wound, but to help you make sense of what you may have learned elsewhere. The Limited Waiver Program is now expired and not likely to return.

The One Remaining Temporary Program

In the summer of 2024, the Department of Education will be conducting a one-time update of payment counts for Income-Driven Repayment (IDR) plans.

This update is part of a broader initiative that impacts all federal borrowers — not just FFEL borrowers or those seeking PSLF. However, the update does offer a huge perk to borrowers with FFEL loans who want to pursue PSLF. If those borrowers consolidate their loans into a Federal Direct Loan before June 30, 2024, they can receive credit for their past periods of public service.

A Quick Recap: The standard rule for FFEL borrowers in PSLF jobs is bad. There was a temporary program to fix this issue, but that temporary program expired.

A new temporary program was created, and that new program will be available until June 30, 2024.

FFEL Loan Example

Today’s topic is one of the more advanced federal student loan issues, but it affects many borrowers and is an easy mistake to make.

Let’s start with what a common scenario looked like under the old rules:

  • The borrower gets $200,000 to pay for medical school (though this issue applies to any graduate program).
  • The borrower takes a public interest job, intending to have student loan debt forgiven after ten years.
  • To qualify for public service forgiveness, the borrower signs up for a repayment plan based on their income.
  • The lender tells the borrower that their payments will count towards the 120 payments needed for public service forgiveness.
  • After several years of making these payments, the borrower learns that because some of the loans were graduate PLUS loans made under the FFEL program, they are not eligible for public service student loan forgiveness.
  • The borrower has to make student loan payments for several years extra because of this mistake.

As a result of this sequence, many borrowers have lost years that could have helped them qualify for PSLF. Both the Limited Waiver and IDR Count update were designed to help borrowers with this issue.

The Issue with FFEL Loans and Public Service Student Loan Forgiveness

The most frustrating part about this example is the fact that this borrower could have had all their loans eligible for public service forgiveness had they consolidated from day one.

Many customer service representatives did not understand this wrinkle in student loan law. It is a classic example of the dangers of relying on your student loan servicer.

What loans does this apply to?

This issue is most commonly associated with FFEL loans, but it also applies to Federal Perkins Loans. The Federal Family Education Loan Program was in existence from the mid-’60s until 2010. Under the FFEL program, borrowers received federally-insured loans through private companies.

If you received a Stafford Loan or a Graduate PLUS loan before 2010, you probably received an FFEL loan.

What to do with FFEL Loans?

Borrowers can include FFEL Loans (with the notable exception of Parent PLUS loans) in a federal direct consolidation. By consolidating, the FFEL loan becomes a Direct Loan eligible for forgiveness under the PSLF program.

Even though the Limited Waiver program is over, borrowers may still wish to consolidate to take advantage of the IDR Count Update.

A Note from the Sherpa: Handling FFEL loans is not the only factor to think about when consolidating federal loans. Borrowers should understand the consolidation process and exercise special care with Parent PLUS loans.

How do I avoid screwing this up?

If you’re managing multiple student loans, go to the National Student Loan Database. Look for any Stafford, Perkins, or PLUS loans. Better yet, call or write your lender, and go loan by loan to verify whether your loans are federal direct loans or FFEL.

One way to check if you’re on the right track would be to have some of your payments certified towards PSLF. If you can only get some loans certified and other loans don’t count, you may have an FFEL problem.

This is not an easy subject, but by identifying that you might have an FFEL problem, you can ask the right questions to your lender and get things under control. You can also warn your friends who may have the same issue.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

138 thoughts on “Consolidation of FFEL Federal Loans for Public Service Student Loan Forgiveness”

  1. I have consolidated my FFEL loans into Direct Loans which are subsized and unsubsidized. Does it matter to further consolidate these loans into a single loan for IDR account adjustment?

    Reply
  2. Hello,

    I have a question about consolidation. I submitted my PSLF back in October of 2022. At that time I didn’t realized not all my loans were direct. I have a commercial Ffel loan with over 120 payments from undergrad and I have a Direct loan through Mohela. (The entire time I have worked for an eligible employer.)
    My direct loans are through Mohela, I have 8 different direct loans with different eligible counts. I am planning on consolidating my commercial ffel loan into a direct loan. Then applying for IDR in hopes of loan forgiveness. My question is, should I consolidate all of my loans together? Meaning consolidating my commercial Ffel and the 8 mohela direct loans? The whole process is so confusing and I feel like I keep getting different advice depending on who I talk with.

    Reply
    • Hi Sarah,

      I can see why this is so frustrating for you. I also appreciate you asking this question, as I could make the article a little bit more clear.

      To help you make sense of things, I think a brief history lesson is necessary. FFEL loans are not eligible for PSLF. Consolidation can fix this eligibility issue, but the standard (or permanent) rule is that progress restarts. A temporary program called teh limited waiver fixed this issue, but the limited wiaver has also expired. A new temporary program, called the one-time account adjustment is another opportunity for FFEL borrowers to consolidate without losing progress.

      As always, its a good idea to talk through things with your servicer to make sure that the rules as you understand them apply to your loans, but hopefully this brief history lesson will help you make sense of some of the inconsistent information you have received.

      Reply
      • Hi Michael, thanks for the quick response. I have one additional thing that I think I need clarified.

        When I consolidate my ffel loan into a direct loan should I consolidate all of my loans together? Meaning I would consolidate the commercial ffel and my current Mohela direct loans (8 in total) all into one direct loan?

        Thanks again for the help!

      • Hi Sarah,

        That is another tricky question. Typically, it is a mistake to combine FFEL with direct loans because you would lose all of your progress towards PSLF. With the planned IDR update, this move is probably safe until December 31, 2023.

        That said, this is a conversation to have with your loan servicer too. They can pull up your account to verify that consolidation won’t hurt your eligibility for any repayment plans or forgiveness options. (For example, if your FFEL loan was a Parent PLUS FFEL loan, it would be a bad idea to combine them)

  3. Hi, I have very recently learned of my successful application for PSLF under the temporary waiver. I started payming my student loans in 2004 and have never missed a payment. I had FFEL loans most recently serviced by Navient. I consolidated in 06/2022 to direct loans as required. It was a long process, but my qualifying payments updated on the Mohela site. I had or have 182 qualifying payments, 62 more than the required 120. ALL of these payments were made to Navient, prior to my consolidation. Am I understanding this correction – that I will not qualify for reimbursement for those additional 62 payments because they were all made pre-consolidation? Now that Mohela has updated my account to show loan discharge, all of the eligible/qualifying payment info is gone from the site. thanks

    Reply
    • Congrats on getting your loans forgiven Brian!

      Your understanding regarding the refunds is correct. Extra payments made after consolidation would have been eligible, but FFEL payments made before consolidation are not eligible for a refund.

      Reply
  4. As everyone knows this student loan issue is quite frustrating and aggravating. I’ve been on the PSLF since 2009. In 2017, I did a deep dive as I noticed they weren’t counting all of my payments. So, in January after much research, outreach to over 4 lenders that they kept transferring my loan to I obtained all the necessary documents and information and sent a very detailed letter in January 2018. I continually got the runaround for over 4 years as I checked up on the progress and lack of respondence. It wasn’t until the spring of this year with everything going on they finally reviewed everything and attributed my payments accordingly.

    Recently, I read with all these changes that depending upon the timeframe of payment and loaners paying over 20 or 25 years can have the forgiveness. This reminded me that I originally consolidated my FFEL loan back in the early 2000’s as income based. I have misplaced my contract which I had seen last year. So, I called my lender (was just changed again) and they have no record other than 2009 for (PSLF). So, I called previous lender who had it when it was originally consolidated back in 2001. They don’t have record. So, I called Federal Student Aid they don’t have it. I inquired of this as I saw it on their site a few years ago. I’ve done a compliant to FSA and Mohela. I’m trying to figure out how to complain to PHEAA (AES) as they were the original.

    What steps do you think I can take in this regard? And is the 20 or 25 years still applicable if they changed the type of consolidation in 2009 due to PSLF?

    Thanks

    Reply
    • I’m not sure what you mean by “changed the type of consolidation in 2009 due to PSLF”.

      Let’s back up a second, dating back to 2001 when you started repayment, have you been in a PSLF job that entire time?

      Also, before we spend too much time on this issue, be sure to check out the Limited Waiver on PSLF. The deadline to apply is less than two weeks away, and from the sound of your question, it could be a critical deadline for you.

      Reply
  5. When the forgiveness plan was first announced, it was my understanding that old FFEL loans held by commercial lenders would be included. Today (10/16), I learned that these loans had to be converted to a direct loan by September 29…the same day they announced the requirement. My servicer (Navient) did not notify me of any of this, and I had to do a lot of digging on my own just to find this out. Am I seriously going to miss out on $20K of forgiveness because the administration gave essentially zero warning about this problem?

    Reply
  6. Hello. I had two privately held FFELP loans through Navient and recently consolidated them into a direct consolidation loan. Luckily it was before September 29th and the recent change in deadline to qualify for the $10,000 forgiveness and, more importantly, the one time IDR adjustment. My question is will all 208 payments I have made towards this loan, including 7 years in an IBR with Navient, be counted when they do the one time adjustment? How will the federal government know how many payments I made to a commercial lender? This one time adjustment could cut my remaining time in repayment by 10 years if all my payments are counted so I want to make sure I’m doing this right.
    Thank you

    Reply
  7. I currently have two medical school consolidated loans of 102,000$ now held by Aspire at 0.875% interest. I have worked for a non-profit since 2010 that qualifies for the PSLF. My understanding is that need to consolidate these a direct loan to qualify for the PSLF. I am concerned that if I consolidate to a direct loan, will I absolutely receive the PSLF? I don’t want to consolidate at a higher interest rate, only to find out I don’t somehow qualify and then end up paying a higher interest rate on this direct loan.

    Reply
    • I can’t give you any guarantees, Pamela. However, based on your comment, it sure sounds like consolidating is the right move for you.

      Your description sounds like you have FFELP consolidation loans. If you apply to consolidate these loans before October 31, the payments made before consolidation will count towards pslf. This temporary program is called the Limited Waiver on PSLF. Reading up on the limited waiver will hopefully give you some comfort.

      I’d also add that applying to consolidate and actually consolidating are different things. Before the consolidation is finalized, they will mail you a letter detailing the loans that will be consolidated. At that time, you can cancel the consolidation if you want. If everything looks right, simply do nothing, and the consolidation gets finalized.

      Reply
  8. I currently have 2 FFEL loans on an IBR plan. The rest of my loans are all direct loans under REPAYE.

    I would like to get the FFEL loans out of the FFEL program, but don’t want to start the clock over on the payments (not currently pursuing PSLF, just the 20-25 year forgiveness from the IDR program).

    My question is do the new rules apply only to PSLF payments, or are they expanded to payments made under the IDR program? If consolidate the two FFEL loans will all the payments made to both the direct loans and the FFEL still count toward IDR forgiveness after consolidation?

    Also, if I consolidate the FFEL, can I just consolidate that with one of the small Direct Loans that I have, or do I have to wrap them all in. If I did this, I wouldn’t be touching the bulk of my loans which are direct loans and have been IDR repayment for 10+ years.

    Thank you for all the information, it is very helpful!

    Reply
  9. My husband and I consolidated all of our student loans into an FFELP Consolidation in 1997. This, I assume, is what was known as a spousal consolidation loan. According to studentaid.gov, that loan was paid off in 2005 by a Direct Consolidation loan which, in turn, was paid off within a matter of weeks by a new FFELP Consolidation loan which we have been paying ever since. I am trying to get documentation but the scenario seems odd. Studentaid.gov shows my spouses loans paid and all debt under my name. Am I still considered a spousal consolidation loan?

    Reply
  10. I have one FFEL loan with Navient (low interest), 2 FFEL loans under Dept of Ed and 2 Direct loans with Dept of Ed serviced by Aidvantage. I was told by Aidvantage that I needed to do a direct consolidation loan for all 5 loans in order to be eligible for the limited PSLF with the new servicer being Mohela. Is that true?
    Or do I leave the direct loans alone and just consolidate the 3 FFELs? I don’t want to lose past payments for the direct loans (if they are even eligible). But I do want past payments for the 3 FFELs be eligible. I am unclear about the rules about consolidation if you have a mix of direct loans with the Dept of Ed and FFELs (direct and commercial) and you are trying to get limited PSLF.

    Reply
    • You will definitely need to consolidate the FFEL loans before October 31 to take advantage of the limited waiver.

      Your servicer was right about the loans going to Mohela after consolidation. Mohela handles all of the PSLF borrowers.

      Reply
  11. Hello Michael,

    I am a little confused reading about the limited pslf waiver program. I have 9 direct loans (a mix of graduate plus and stafford loans) serviced by fedloan servicing and 1 remaining ffel loan serviced by Navient. The ffel loan has by far the smallest remaining balance of my remaining loans.

    I work for an eligible pslf employer and am 28 payments away from 120. My 9 direct loans and all of my payments on them show as qualifying for pslf on the paperwork I have received from fedloan.

    I just am confused on the ffel loan. Reading the limited waiver article on the student aid website, I get the impression under the traditional pslf rules that you are completely ineligibe for pslf if you have any loans other than direct loans? Do you agree with this interpretation?

    Should I consolidate the 1 ffel loan I have with the other direct loans before October 31st? Or am I offbase here? It would be a nightmare to lose all the progress I have made towards pslf just because of the 1 ffel loan. Thanks a lot for your help it is much appreciated.

    Reply
    • Luke, simply having an FFEL loan does not disqualify your other debt from qualifying for forgiveness. However, your interpretation is correct in that FFEL loans are not eligible for PSLF, but if you consolidate the FFEL loan into a federal direct loan, the debt becomes eligible for PSLF. If you consolidate before October 31, you get credit for payments made before consolidation.

      I’d suggest calling your servicer to discuss your consolidation strategy to make sure that you get qualified for forgiveness as quickly as possible and don’t miss the critical 10/31 deadline.

      Reply
  12. Hello! I’ve read people on the internet suggesting that folks who have FFELP loans serviced by a place like Navient would benefit from consolidating them via the Federal Consolidation application, but I tentatively fiddled with that and I see that the $23,000 FFELP loans ‘seem’ to roll into a new $40,000-ish Federal loan. The possible 10,000 forgiveness gets swamped by the extra interest owed on the new loan, and a person would have to pay 30,000 after forgiveness, which is a growth of 10,000, not a forgiveness. I wonder if I am misunderstanding them when people advise this. They seem to be advising it as a mesns of making sure that your non-Federally held FFEL loans will be eligible for the 10,000 forgiveness. I would only consildate federally to take advantage of the public service rule change from Oct 2021, although I would be very wary of doing so, since I wouldn’t want to inflate my current FFELP from 20,000 to 40,000 only to find that I’d misunderstood. Thanks!

    Reply
    • There are a few issues going on here. First, I’d point out that we still don’t have full details on the FFELP forgiveness rules for the recently announced $10,000 of forgiveness. Second, I’m not entirely certain why your loan balance would double from consolidating. If I had to guess, the issue is outstanding interest that has not been capitalized. This is a tricky issue, because it means that uncapitalized interest may eat all $10,000 of forgiveness. I’d suggest you read up on capitalized interest before you make your next move. Finally, if you are considering PSLF, that October 31, 2022, deadline is pretty set in stone. If you potentially will be losing out on many years of payments, it could be critical that you don’t miss the deadline.

      Update 9/8/22: Here are the latest details on how they are handling FFEL loans.

      Reply
      • Thanks very much, sir. I wish I’d have read your article on capitalization 15 years ago. These loans are actually my wife’s, I just pay them. In 2005, she talked to someone and set up some payment plan, at that time the balance was 32,000. 10 years and 24000 in payments went by in blissful ignorance until I noticed the balance had actually grown to 35000. That had to have been like one of the scenarios you described in the capitalization article.
        I agree, I do need to get moving on the PSLF deadline, and also that FFELP forgiveness is anyone’s guess, if it even will be forgiven.
        Yes, the doubling of the balance happens on the Federal Consolidation online application and it is strange, because the two FFELP Consolidation loans add up together to 23,030 in principal and only 93 dollars remaining in accrued owed interest at this point. So I don’t understand it. If it weren’t for that doubling, I would consolidate in a heartbeat. My wife has about 6 years of qualifying nonprofit work at this point. I suppose I may need to ask someone at studentaid.gov or just take the leap.
        Thanks very much for your time and your previous answer, highly appreciated!

  13. Hi,

    I’m a bit confused as the rules are complex. I have a consolidation loan with Nelnet that’s an FFELP CONSOLIDATION. Can I consolidate it into a Direct Loan even if I’m not looking for public service forgiveness? That seems to be a requirement, but I don’t know if it’s been waived.

    Thanks so much!

    Reply
  14. I’ve got two federal family education loans that went into default in 2005 and I consolidated them and the student loan servicer is Nelnet. The FFELP loans says the lender is Truist which is SunTrust bank. I’m trying to get them consolidated soon into the Direct Loan Program so I can get the $10,000 student loan forgiveness since I only owe $8,700. When my loans went into default they penalized me $5000. I’ve already paid about $20,000 but much of it went to interest which is why I’m still at $8,700. Do you think I’ll be able to get this consolidated into the Direct Loan Program owned by the Department Of Education so I can get them forgiven? They say it’ll take 45 days after I apply for Direct Loan Consolidation which will mean if approved I’ll be there around October 15, 2022.

    Reply
  15. Can spousal consolidation FEELP loans qualify for PSLF if we convert it to a direct loan? We were guided 20 years ago to consolidate in this manner and have never been able to qualify for pslf even though we have have worked in schools and nonprofits for 20+ years. Is it worth converting? Or will we just be stuck with a higher payment?

    Reply
  16. The only student loans I have are 2 FFEL loans that are consolidated at Aspire. First payment was back in 2006. I had Pell grants then. I assume this means they will still not be forgiven by Bidens announcement? If not, can I still move them to a direct loan to at least get no interest charged and is that advisible?

    Reply
    • That is a great question and something I can’t answer definitively at this time. Consolidating them into a direct loan now may help you qualify for the 20k in forgiveness. See this recent comment for a similar discussion on this exact issue.

      As for the interest and payment freeze, if you consolidate now, you can take advantage of the remaining four months of 0% interest and no payments.

      Reply
  17. Can FFELP Consolidation loans be consolidated into a Direct Loan? Specifically, I have two FFELP Consolidation loans serviced by Navient. Can these loans be consolidated into a Direct Loan? Thanks.

    Reply
  18. I consolidated my federal loans with some private loans with NaviRefi and now have found out about the extended PSLF program. My employer is a eligible employer, is there a way that any of that loan could qualify under the program?

    Reply
  19. I consolidated all of my subsidized and unsubsidized Stafford loans into an FFELP Consolidation loan back in 2005 to lower my interest rates from 6.8% to 3.25%. I’ve been paying on them all these years. I’m confused by what this PSLF rule change means for me… Can I consolidate my FFELP consolidation loan into a Direct consolidation loan in order to take advantage of this?

    Reply
  20. I’ve got two old FFEL loans that I’ve been paying on since 2005. I have recently taken out PLUS loans in 2021 and 2022 for my daughter’s college.
    If I consolidate the FFEL loans in to Direct Loans now to qualify for the PSLF forgiveness program, does that prevent me from consolidating my PLUS loans after my daughter graduates next year? Those are a much larger amount that my FFEL loans, and I don’t want to get into a situation where I either can’t consolidate them later. Also don’t want to get the FFEL loans swallowed up in the amount I owe for the PLUS loans, and lose my 17 years of payment credit toward forgiveness.

    Reply
    • You are smart to want to keep the PLUS loans separate from your FFEL Loans.

      Fortunately, consolidation is not a one-time deal, and you can have multiple consolidation loans. In other words, you could consolidate all of your FFEL loans into one Consolidation loan and separately consolidate your Parent PLUS loans into a different consolidation loan.

      I’d encourage you to work with your servicer to make sure the two consolidation loans are handled correctly, but this definitely can be done.

      Reply
  21. With the recent changes to the program,
    can you consolidate FFEL loans into PSLF eligible loans under an Income Contingent Repayment plan?

    Reply
  22. I just completed the PSLF Help Tool and it shows that I have 2 unsubsidized FFEL Consolidation Loans. I know they are both serviced by Navient, and I continue to pay them monthly. I have worked for a university since 2005, and I made 127 payments between Oct 2007 and April 2018, while working full-time. I continue to work full-time for the same university. If I apply for Direct Loan Consolidation, will all of my past payments be counted? If so, I think I should immediately be eligible for loan forgiveness. If this is all correct, which payment plan should I choose for the new Direct Consolidated loan? I’m assuming that I will actually be refunded for anything I pay after the consolidation, given I do believe I have 120 payments over 10 years. In this context, which repayment plan should I choose for the new Direct Consolidated loan? Thank you!

    Reply

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