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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:

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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

For many years, FFEL loans have caused headaches for borrowers seeking Public Service Student Loan Forgiveness.

Many borrowers spent years working in public service only to learn that their time didn’t count because FFEL loans are not technically eligible for PSLF. Consolidation fixes the eligibility problem, but it used to mean that borrowers had to start the student loan clock from scratch.

Fortunately, recent changes made by the Department of Education now allow borrowers to count their time before and after consolidation towards the required ten years of service.

Some borrowers will even qualify for a large refund of previous payments.

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

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

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

The recent limited waiver from the Department of Education now allows borrowers to count the time before consolidation towards PSLF. Previously, this time did not count.

Important Deadline: The expanded FFEL rules only apply until October 31, 2022.

The Department of Education has limited authority under the CARES Act to count the old FFEL payments towards PSLF. If you fail to consolidate before the deadline, the payments made before consolidation will not count.

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 upon 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 lost years towards Public Service Loan Forgiveness

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.

Fortunately, the expanded rules now help borrowers who consolidate before the deadline.

What loans does this apply to?

This is an issue with 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 got federally insured loans through private companies.

If you received a Stafford Loan or a Graduate PLUS loan before 2010, you probably have 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 Public Service Student loan forgiveness (PSLF) program.

Historically, borrowers had to weigh the pros and cons of consolidation and restarting the clock towards forgiveness. Consolidation allowed the PSLF clock to finally start, but it meant going back to zero on the progress towards forgiveness under an income-driven repayment plan.

Under the new rules, the decision to consolidate is more straightforward, because payments made before consoldiation now count towards PSLF.

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

If you have FFEL loans, get them consolidated as soon as possible so that you can start making payments on them that count towards Public Service Student Loan Forgiveness.

One way to check whether or not you are doing things right 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.

Most importantly, if you have FFEL loans and want to count your previous payments towards PSLF, be sure to conoslidate before October 31, 2022.

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.

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

  1. 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

    • 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.

  2. 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?


    • 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.

  3. 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?

  4. 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

  5. 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.

    • 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.

  6. 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!

  7. 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?

  8. 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.

    • 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.

  9. 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.

    • 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.

  10. 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!

    • 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.

      • 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!

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