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Consolidation of FFEL Federal Loans for Student Loan Forgiveness

Michael Lux Consolidation, Student Loan Blog, Student Loans 19 Comments

The rejection rate for Public Service Student Loan Forgiveness is a horrifying 99%. Some of the problems that lead to rejection can be easily fixed, while others are far more complicated. Issues with Federal Family Education Loan Program or FFEL loans are among the most serious because there is no way to correct prior mistakes.

FFEL loans are not eligible for Public Service Loan Forgiveness. However, they can be consolidated into a federal direct loan to become eligible. Consolidating the right loans at the right time is extremely important.

Addressing FFEL loans for purposes of loan forgiveness can be complicated because there is no one size fits all answer. For some borrowers, direct consolidation is an essential step. For others, it could be a huge mistake setting them back years.

FFEL Loan Example

Today’s topic is one of the more advanced federal student loan issues, but it is something that affects many borrowers, and the wrong mistake could result in years of extra student loan payments.

Let’s start with what the worst-case scenario looks like:

– 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.

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.

Here comes the most important sentence of this entire article: Some loans are not eligible for federal government public service forgiveness, but they can be made eligible if they are properly consolidated through federal government consolidation.

Many customer service representatives do not understand this wrinkle in student loan law. It is a classic example of why you can’t take financial planning advice from your student loan lender.

What loans does this apply to?

This is an issue with Perkins Loans, but it is most commonly associated with FFEL 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?

FFEL Loans (with the notable exception of Parent PLUS loans) can be included 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.

One word of caution: If you have been making IBR payments towards a loan and then include it in a loan consolidation, the previous payments will not count towards student loan forgiveness. When you consolidate, you start your countdown to 120 payments from scratch. If you have already been making payments and are thinking about consolidating to get your FFEL loans eligible for forgiveness, it is important to weigh the pros and cons of your options… some previous payments may not count, but more loans become eligible for PSLF.

Due to issues with the “forgiveness clock” restarting after consolidation, the best practice for borrowers with FFEL loans is to consolidate immediately at the beginning of loan repayment.

Not all borrowers were advised to consolidate their FFEL loans right away. Delayed consolidation might reach the point where it is better not to consolidate at all. Borrowers who are close to student loan forgiveness for their federal direct loans should be cautious not to consolidate their direct loans with the FFEL loans. In some cases, it may be best to pursue forgiveness on the forgiveness-eligible direct loans and to shift to Plan B on the FFEL loans.

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 write 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.

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Everyone who takes student loans should find out about this when they take out the loans.

Eric Culbertson
Eric Culbertson

When I called Nelnet in 2007 they told me I was in the right loan and on the correct repayment plan to have my loans forgiven under PSLF. They have records of this call and even the details of the conversation. The representative even apologized when she told me I have FFEL and not the qualifying Direct loans. What recourse do I have? I’m seeking legal help and even contacted my congressman. To make it worse I was on a 10 year repayment plan prior to calling and they moved me to income based repayment plan in 2007 so that I have a balance left to forgive after 10 years.

Any insight is appreciated.

The Student Loan Sherpa

One step you can definitely take is to file a complaint with the Consumer Financial Protection Bureau. Reaching out to your state’s attorney general could also potentially be helpful.

Unfortunately, there are many people in your situation who were given inaccurate information 10 years ago and relied upon it. I’ve not heard of any procedure that any loan servicer has in place to address these errors.

Guest of the day
Guest of the day

Hard to take this advice seriously with all the errors.

The Student Loan Sherpa

Thanks for taking the time to comment Guest of the day. Errors are definitely a serious matter and something that should be addressed promptly. What errors do you see?

Liberal? Like Tom Jefferson!
Liberal? Like Tom Jefferson!

What if you had Ford direct loans (eligible) and the student loan company consolidated you under FFEL without telling you that was the program?

Rece Marie
Rece Marie

Same thing happened to me with AES

The Student Loan Sherpa

I’m not quite sure what you are describing… you had federal direct loans that were consolidated into an FFEL loan? When did this happen? Also, who is the student loan company who did this?


I posted at the top of this thread, but think this situation described here is similar to mine. Here is a snap shot of what Navient has on my loan. I believe it was a direct federal loan that was consolidated within 18 months of graduation (Circa 2002) into a FFELP consolidated loan.

Reply to  Zeppelin

These were Stafford subsidized and unsubsidized loans that were consolidated. The consolidation took place in 2003, not 2002.


Shortly after graduating grad school I consolidated all my Federally subsidized and unsubsidized loans. They are currently listed in my loan service provider’s account as FFELP loans. I am not sure how to interpret this article, since my already consolidated loans are listed as FFELP loans. I’ve already met the 10 year repayment threshold in a qualifying public service role. I was told by a previous loan holder that I would not qualify for forgiveness, so I sort of forgot about it. Is there a path forward here?

The Student Loan Sherpa
Reply to  Zeppelin

Have you already applied for PSLF? Before doing anything, I’d apply to have the loans discharged. I suspect your application will be rejected based upon your comments in this thread, but it is definitely worth trying.

The program that you used to consolidate your loans into an FFEL loan no longer exists. I suspect that because your loans are not federal direct loans, you will have a huge challenge getting them discharged.

There is a temporary expanded public service forgiveness program to help people who were on the wrong repayment plan, but I don’t think this program will help your situation. More details here:

I guess I see several options if your requests for PSLF are rejected:
1) federal direct consolidation and start from the beginning
2) aggressive repayment of the debt
3) go after forgiveness based on the IDR plan you have been using (usually comes after 20 or 25 years worth of payments)
4) Hope that new rules are issued to fix PSLF for people with FFEL loans


Thank you for the quick reply. Based on my earlier investigations, I feel like I am hearing the same as before. I don’t have that much left on my loans, so I will just pay them off as I had planned on doing when I took them out.


Interested in you using your crystal ball a bit. I won’t hold you to it – I’m just looking for someone with better perspective than I have on the bigger game at play. The COVID-19 act left PSLF loans out of the equation when it came to being able to skip payments and not accumulating interest. There’s rumors around Washington about a broader forgiveness of up to a certain amount of student loans in the future. Should something like that happen, do you reckon that PSLF loans will again be left out of the picture? Because they’re private? This plays into how my partner and I think about possibly consolidating into a Federal Direct Loan. We’ve built up time with our loans on IBR, but we don’t want to miss out on something that might happen that would release us from a large amount sooner.

Second, you mention 10 years of payments under IBR lead to forgiveness. However, I thought I had read it was 25 years. Which is correct? Neither my partner nor myself are looking at public service loan forgiveness – just the regular forgiveness for paying IBR for an ungodly amount of time!

Thanks for your help and site!

Reply to  Michael Lux

I sincerely apologize. I got all my acronyms mixed up. The loans I was referring to were FFELP loans. The ones they gave to old-timers like me as Federal Stafford loans, etc. Can you answer again, please, with that data point fixed. Many apologies.

Reply to  Michael Lux

Fair enough! Thanks for your time. I can contact my borrowers to see how much time I have on the IBR clock, right? Thank you again!