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.
I have FFELP loans on which I paid 120 payments while working for a qualifying employer. My own failure to better educate myself prevented me from applying for PSLF initially, but now that I have the opportunity to apply under the new, extended guidelines, I don’t want to make a mistake.
I know I have to apply for federal direct loan consolidation to apply for PSLF/TEPSLF; however, I also have a federal direct Plus loan I borrowed in 2018 for my daughter on which I made payments until the current pause on loan repayments. Can I apply to consolidate only the FFELP loans on which I have made the qualifying payments and have two federal direct loans? If I have to consolidate the FFELP and the direct Plus loan into one loan, will that disqualify me for loan forgiveness under PSLF/TEPSLF?
That is a tricky situation Amy.
You are allowed to consolidate all of the loans into a single loan. However, including the Parent PLUS loans means that the new consolidated loan would only qualify for the ICR repayment plan (which has much higher monthly payments than the rest of the IDR plans).
However, it is possible that by combining all of your loans together, you could get all of the debt forgiven under PSLF if your 120 prior payments are certified.
I’d encourage you to work with your servicer to identify the pros and cons of each option as they apply to your specific loans.
I have a commercially-held FFEL Loan, making payments since 2006 under IDR. If I convert this loan into a Direct loan, would this wipe out my progress toward forgiveness?
The below information is from the Forbes article that talks
The Education Department also indicated that it will count payments towards loan forgiveness under PSLF and IDR programs that were made prior to federal loan consolation. This could have huge implications for borrowers since consolidation typically “restarts the clock” on a borrower’s IDR loan repayment term. Hundreds of thousands of borrowers may ultimately get advanced much closer to loan forgiveness as a result.
Under the temporary policy that was just announced, consolidating your commercially-held FFEL loan will not restart your progress towards forgiveness.
Good afternoon; I had private school loans in forbearance for 25 years totaling 115k. I was told by government service provider to consolidate my loans and I would be approved for full forgiveness if I was in an income driven payment plan and had 10 years of proven full time work history as a teacher. I learned today that they don’t count any work after 2007 and that all my IDR doesn’t count after consolidating to FFEL. After purchasing my first home a few months ago, there is no way I can afford these payments. Since April the servicers were saying I’m right on target for full forgiveness until today I’m hearing things that were never discussed or disclosed to me. I’m fearing the worst and having a panic attack.
I think it is important to clarify a couple of things here.
First, are we talking about private student loans or are we talking about privately-held federal student loans. FFEL loans are privately-held federal student loans and have much different rules than private student loans.
Second, the PSLF program was created in 2007. Work before 2007 can’t count toward PSLF, but work after certainly can.
The consolidation timing and your progress toward forgiveness is a bit more complicated. This article on the forgiveness clock and consolidation should hopefully shed some light on that front as well.
This is great info, I have a pretty unique situation. My mother has an consolidated FFEL , that was originally a Parent PLUS. My father passed away a few months ago, and she is looking for payment relief.
Our servicer , Navient, says she’s not eligible for any IBR. They quote “Unfortunately, Parent PLUS Loans or any consolidation loans that repaid a Parent PLUS Loan are not eligible for IBR. ”
Can I convert this to a direct loan somehow? Does she have any options to lower her payment? She’s 82 and really needs help.
I think I can explain the miscommunication between you and your servicer. You seem to be asking about Income-Driven Repayment (IDR) plans. IDR plans allow borrowers to make payments based upon what they earn each year, so for many borrowers, it can mean $0 per month payments. IBR, the plan you asked about is one of the many IDR plans. It would be correct for Navient to say that your mom can’t qualify for IBR, but it is wrong to say that she can’t qualify for any IDR plan.
It’s ridiculous that these plans all sound so similar, but the plan that you want to get her signed up for is Income-Contingent Repayment (ICR). Federal direct consolidation is an option to get the loans eligible for ICR.
Thank you for the article.
I have a question. I have Stafford Subsidized and Unsubsidized FFELP loans. I have not figured up total payments yet, but I am guessing I will be around 24 payments or so shy of 120.
I have been scared of consolidating for the fear of payments being higher. I pay based on IBR.
If I consolidate them am I still eligible to pay based on IBR? And if so are the payments still reasonable?
Great question.
By consolidating, you will still be able to sign up for the IBR plan. Better yet, you will also qualify for the REPAYE plan, which could result in even lower payments.
I originally had loans dating back to 1990-1994. They are now FFEL loans. I worked for a qualifying school district for 20 years. If I consolidate to a Direct Loan under this temporary program, will my loans still be eligible for the PSLF even though they were originally old? I had heard something about them having to be after 1997.
What you might have heard was that payments made before 2007 don’t count (because that was when the PSLF program was created). From your comment, it sure sounds like you might be able to benefit from the limited waiver.
I consolidated my student loans to a single FFEL loan in 2006. Am I understanding correctly, there is nothing I can do to convert this consolidated FFEL loan into a Direct loan?
I think you are mistaken. You should be able to consolidate a single FFEL loan (even an FFEL consolidation loan) into a federal direct loan.
Do I need other loans in addition to my FFEL loan in order to apply for a direct loan consolidation? It appears from the name that if you only have a FFEL loan, you can’t “consolidate” it into a direct consolidation loan to take advantage of PSLF.
You should be able to consolidate a single FFEL loan into a federal direct consolidation loan.
Great and useful website. I have three FFEL loans that are worth about $60k. I have about $230k of direct loans (direct grad plus, direct subsidized/unsub, and one weird direct consolidated unsubsidized loan [for about $7k from 2006]). I’ve never certified for PSLF before but Im about 7 years into government service. My question is…to take advantage of the PSLF waiver for the FFEL loans should I just consolidate the FFEL loans only? Or should I consolidate everything and then submit the PSLF cert form? I dont believe I had any qualifying payments on the weird direct consolidated loan prior to it being consolidated (which i dont even remember doing)…since I read a second consolidation will wipe out prior payments made before the first consolidation….but this loan is only $7k anyway so I’m not super worried about it. Any help and insight would be awesome. I dont trust the service center reps.
Consolidation usually wipes out prior payments. However, in the case of the limited waiver, it does not.
I get your concern about not trusting your servicer as I’ve gotten bad info from them myself. I find the best way to resolve these issues is to compare what I’m told with the information on the Department of Education website. They recently updated the Limited Waiver information and the details covered are excellent.
I received a letter from my loan servicing AES stating my FFELP loan did not qualify forgiveness under the PSLF Program; however, I may be able to take advantage of the limited waiver if I apply to consolidate my loan into a new direct consolidation loan. I am not sure where to begin this process and how consolidation will affect my payment.
That sounds like good news for you Patsy. I previously wrote about the limited waiver here. Additionally, this chart from studentaid.gov is very helpful.
As for your repayment plan, if you are on an income-driven plan, your monthly payments should stay the same. The Department of Education Loan Simulator is a helpful tool if you want to estimate your monthly payment on various plans.
I graduated from law school in May 2011, my loan grace period ended 6 months later, and I entered repayment in November 2011. My loans included Direct loans, FFELP loans, and Perkins Loan.
I started working full time at a nonprofit October 2011.
Although I entered repayment November 2011, I did not consolidate my loans until May 2012. Even though the original loans were closed/consolidated May 2012, the consolidated loans entered repayment in August 2012. Note: I made payments in June and July 2012 that currently don’t qualify because the accounts were apparently in forbearance while the loan consolidation processed. At the time I was told to continue making payments.
It’s my understanding that the Perkins and FFEL payments I made between November 2011 and the date of consolidation (May 2012 or August 2012) would qualify under the limited waiver PSLF program. However, when I used the PSLF Tool on the Department of Education website, the tool does not acknowledge that I’ve been in repayment for more than 10 years. It appears that the tool does not count the payments I made prior to consolidation.
Since the limited waiver announcement, I have submitted a new employment certification form for the time that I was working at nonprofits between November 2011 and August 2012 via my loan service provider FedLoans.
Today, the service agent told me that they will not process the employer certification forms that correspond with the dates after the loan was consolidated.
This is confusing. Will the Department of Ed count the payments made on my unconsolidated loans (November – May/August 2012) under the new rules? And if so, who is making that determination? Employees at the loan service provider that has decided not to renew its contract and has no incentive besides the legal implications the “Dear Colleague” letter from the Department of Ed to the service providers?
Is it likely this will be sorted before May 2021? Would you advice borrowers who have made 120 payments while employed at a qualified employer, and who believe their 120 payments quality, to defer payment starting May 2021 until Department of Ed finishes review?
Great questions.
First, I’d start by saying I would not read too much into what the PSLF Tool or random call customer service representatives say. The limited waiver ends in October, so the Dept. of Education isn’t going to make a ton of fundamental changes to the online tools, and I’ve heard from plenty of people who received inaccurate info from their servicer.
The Department of Education is saying that the limited waiver processing should be finished by spring, but that is far from a certainty.
That said, I suggest that you keep making payments while the review is ongoing. My reasoning is that if you are found to have been eligible, you will get a refund for the extra payments. If your math was off by a couple of months, I don’t want you to miss out on that time. However, if making the “extra” payments is a hardship and your job isn’t changing, I can see the argument for the deferment pending certification.
I have an FFELP consolidation loan from 2007. However the original loans that were consolidated were all parent plus loans. They got consolidated from several years into this FFELP consolidation loan which I have been paying since 2007. I currently have 0$ parent plus loans.
If I consolidate this through the direct loan program will it count for the pslf limited waiver ( have worked for non profit for 20+ years including since 2007).
I wasn’t sure because I know it excludes parent plus loans!
You are right that one of the big issues with the limited waiver is that it doesn’t apply to Parent PLUS loans. When you say you have 0$ parent plus loans, what do you mean?
My 82 year old mom is in the same situation. My father passed away and she is looking for payment relief.
Is there any way to get a consolidated Parent PLUS FFEL loan to qualify for lower payments?
It is. See my response to your other comment for full details.
Michael,
I’m starting into my 19th year in the federal government. I previously applied for the PSLF in 2017 and was denied for having a FFEL rather then a Direct Consolidated Loan. Then I was told that because I had consolidated my FFEL in the early 2000s, I could not “re-consolidate” into a Direct Consolidated Loan thereby forever making me ineligible for the PSLF. Does this new waiver address this?
Hi Mel,
The new waiver should help your FFEL loan issue. However, you still need to consolidate your loans into a federal direct loan. The information you got about “re-consolidating” wasn’t accurate. Even if you have one single FFEL consolidation loan, you should be able to consolidate it into a federal direct loan. (Things get complicated for FFEL spousal consolidation loans, but I’m assuming that isn’t the situation you are in.)
Michael,
I’m in the middle of filling out the Direct Loan Consolidation application form and it just got really confusing–I’m having trouble figuring out which repayment plan to select.
Which repayment plans are eligible for PSLF? I read that only payments made under ICR, IBR, REPAYE, and standard 10-year plans count
I made over 120 payments under the FFEL, which now should count towards the PSLF, right? My question is, do I have to consolidate under one of those four eligible plans for future payments in order to have the past FFEL payments count? Of the repayment plans available to me for consolidation, the aforementioned ones increase my payment considerably and I want to make sure it is absolutely necessary for me to choose one of them in order to make my past payments count. Thanks!
So if we have a Loan Code J Unsubsidized FFEL Consolidation Loan (2 actually) and I have worked 4 years for an eligible PSLF employer, I should execute a Direct Loan Consolidation…..but I MUST carefully pick which payment plan option to request 🙁
This is NOT clear as you study the options, and HERE is were we may all mis-step: please advise us on this aspect so we do not screw it up as we execute out Direct Consolidation request applications prior to October 2022 /|\
Thanks for this article! I’ve been making payments on my Direct Consolidated Loan and my Stafford Loan (not consolidated) for almost 10 years. I have 109 PSLF certified payments, so I should be eligible for forgiveness on the Direct loan next November. I’m so close to being done that I’m nervous about accidentally resetting the PSLF clock and not getting the historic payment credit if there’s some administrative mistake when consolidating that Stafford loan. Especially with the upcoming changes in loan servicers. Should I have more faith in the process and *gulp* consolidate? Is it possible to consolidate the Stafford loan by itself into a Direct Loan so that it doesn’t impact my almost-paid-off Direct Loan? Many thanks for your insight.
I think it is fair for PSLF borrowers to have some concerns about the process given the issues we have seen over the years. That said, I think you should be able to consolidate and get the whole thing forgiven.
I’d suggest working with your loan servicer every step of the way to verify that no mistakes are made. Be sure to double-check what you are told, but it sounds like you are in good shape.
Will do- thanks for your reply and insight!
Hello, thank you for the article. i’ve been paying over 10 years on a income driven FFEL loan. I have worked for a county government for over 20 years. to qualify under the new exception, when consolidating which direct loan type do i have to chose in order to have the previous payments count along with any future payments?
You are looking for a federal direct consolidation loan. It is the only option available when you consolidate your federal student loans through the Department of Education.
Thank you for this very helpful article. What if my FFEL payments were in a graduated payment plan? Can I consolidate and have previous payments count towards the 120?
Yes, you should be able to make that move. This article on the limited waiver breaks down the rules and has links to the appropriate government resources.
Best of luck to you!
Hi Michael.
I’m confused on which loans to consolidate. I have been told to consolidate my Direct Loans with my FFEL Loans to get the higher payment count. In the past, under old PSLF standards that would rest your count.
Hi Eddie,
I think everything you have said is accurate.
Here is what the Department of Education says about consolidating loans with different payment counts during the limited waiver:
“As long as your repayment history overlaps for each loan, the consolidation loan will be credited with the largest number of payments of the loans that were consolidated. For example, if you had 50 qualifying payments on one Subsidized Stafford Loan and 100 qualifying payments on another Subsidized Stafford Loan and you consolidate those loans, you will receive 100 qualifying payments on the new Direct Consolidation Loan.”
I consolidated multiple Stafford loans into a FFELP loan in 2002. Consequently, I now have a single FFELP loan that I have been making payments on for almost 20 years. Does this mean I’m ineligible for student loan forgiveness under the rules of the PLSF waiver, because I can’t consolidate a single loan into a Direct Loan? Is there a rule that covers those of us who already consolidated Stafford loans into a FFELP loan?
I don’t believe there is any special rule for those who consolidated into an FFELP consolidation loan. However, you should be able to consolidate your FFELP consolidated loan into a Federal direct consolidation loan in order to take advantage of the waiver. (It is possible to consolidate a single loan for federal direct consolidation.)
Michael, I’m in the exact same scenario. My servicer was unable to provide me with a roadmap for getting this done. Should I be speaking with the DOE?
Your servicer really should be able to talk you through the process. However, the average customer service representative likely won’t be able to talk you through things. If you ask a question the rep can’t answer, ask to speak to someone who can. Additionally, the federal servicers are struggling with the limited waiver and helping borrowers at this time. Hopefully, in a few months, they will be better about walking you through the process so that you are comfortable with things.
Should you decide that they are not adequately helping, talking to the DOE is an option. I’d suggest the Federal Student Aid Ombudsman Group.
What if you have been making direct loan payments while simultaneously having FFEL loans through a separate lender? So paying 2 student loan payments per month not realizing the FFEL did not qualify. After consolidation do the FFEL payments prior to consolidation add to total count as well?
Great question. I don’t think you will get double the payments. For example, your PSLF work the month of March 2018 can only count as 1 of the required 120 payments.
Under the temporary expanded waiver, your FFEL payments prior to consolidation should now count.
Hi – I appreciate your helpful article, but I’m still confused. You say “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.” But earlier in the article you say “Under the new rules, the decision to consolidate is more straightforward, because payments made before consoldiation now count towards PSLF.”
I’ve been paying FFEL loans for 10+ years on time and I have 15 years in the fed govt, if I consolidate to a direct loan, will I need to have 120 more payments before I’m eligible?
Thanks for any help you can provide – your site is a great service!
Hi Dan,
That is a very fair question and something I may need to clarify in the article.
Here is the situation:
– FFEL loans are not eligible for PSLF, but they can become eligible through direct consolidation
– Direct consolidation does restart the forgiveness clock, however…
– the limited waiver (the new rules) allows borrowers who consolidate before October 31, 2022 to count payments made before consolidation
If you have been making payments on FFEL loans for 10+ years while also working for the fed government, you should be able to consolidate into a direct loan and then have your balance forgiven immediately.
I’d encourage you to certify your employment as soon as possible and work with your servicer on making sure your consolidation request gets submitted without any issues.
Thanks Michael!
Hi Michael,
I am in the same boat as above, 14 years of paying a consolidated FFEL loan and 12 years working for a non profit 5013c company. All payments on time, but monthly payment was calculated based on much lower income during residency or my first year out. I came across this:
met the TEPSLF requirement for the amount you paid 12 months prior to applying for TEPSLF and the last payment you made before applying for TEPSLF to be at least as much as you would have paid under an income-driven repayment plan. Please let me know if this rules me out and my repayment was not income driven the past twelve months.
I think you are mixing two different programs in this question. TEPSLF refers to legislation passed over a year ago to help borrowers who were on the wrong repayment plan.
However, a couple months ago, PSLF was greatly expanded — but temporarily — to help borrowers with repayment plan issues and loan eligibility issues. If you have FFEL loans, you will want to investigate the Limited Waiver that is in effect until October 31, 2022.
I have confused myself with this limited PSLF waiver and I want to be careful I don’t make a mistake. I have a large Direct Consolidation Loan with 108 eligible payments. I also have a defaulted Perkins loan. I know that I should now “consolidate” the Perkins into a Direct Loan. Does that mean (1) I only “consolidate” the Perkins or (2) do I “re-consolidate” the existing Direct Loan with the Perkins? I’m so fearful of “resetting the clock.”
I see an advantage to option number one, but I don’t see the benefit of combining your existing consolidation loan with the Perkins loan. However, I’d encourage you to discuss the options with your student loan servicer. At the very least you will want to get an updated count on your progress.
Additionally, you might want to consider rehabilitating the Perkins loan before you consolidate.
Finally, I’d point out that the deadline on the limited waiver is October 31, 2022. You have a full year to figure it out. I wouldn’t wait until the last second, but you have time to be very deliberate to make sure you are not making a mistake.
Thank you for the reply.
It was my understanding that I could somehow get the benefit of having 108+ eligible PSLF payments “applied” to the defaulted Perkins- so they would both be discharged together in 12 months. The guidance is unclear as to whether the Perkins should just be “consolidated” into its own Direct or whether it needs to be “consolidated” WITH the existing Direct.
The issue with the Perkins loan is that it is not eligible for PSLF. However, by consolidating it into a federal direct loan, the debt becomes eligible for PSLF. The significance of the limited waiver is that payments made prior to consolidation can now count towards the 120 payments necessary for forgiveness.
I still don’t see any potential benefit to combining your Perkins loans with your existing direct loan, nor do I see a reason why the status of your other loans would impact your Perkins loans.
I was under the impression that I could consolidate an existing Direct Loan (108 eligible PSLF payments) WITH a defaulted Perkins to create a “new” Consolidation loan with the benefit of 108 PSLF payments. I would then qualify for PSLF forgiveness of the entire “new” loan upon reaching 120.
This is an interesting situation and a good example of how things can change. One of my contacts just gave me the heads up that the rules regarding this situation may change later on this month. Nothing is set in stone as far as I know, but this is a situation to watch closely. The impression that you are under may soon become the rule.
I am wondering if FFEL spousal consolidation loans are eligible to be consolidated into Direct Loans through this expanded program. I applied and was told I could not reconsolidate a reconsolidation loan. My husband and I are both teachers, and have been paying on our loans since 2003.
I found an explanation for why you were not able to consolidate your FFEL joint consolidation loan.
Unfortunately, I suspect this also means that you two won’t be able to qualify under the limited waiver. However, I’d still encourage you to work with your service to see if there is a way around this particular issue. I’d also recommend reaching out to your elected representatives to put this issue on the radar of people with the authority to fix this problem.
It really isn’t fair to you.
We have FFELP commercial loans paid over 70,000 so far and still owe 60,000. Our loans have been consolidated years ago, do we have any options? Also, Navient added the full amount of our payment as principal. Said the interest is pre-calculated. Is this legal?
Hi Annette,
I’m not entirely sure what you are asking about the pre-calculated interest. The interest calculations can be complicated, but if your lender isn’t able to explain what they did or you think you are being cheated, I’d encourage you to file a report with the CFBP.
As for your options, you may be able to do a federal direct consolidation as described in this article. See my response to Buckeye for more details.
Thank you! I will do that. They stated the interest is pre calculated, so are normal payment is 413.00 they took the 413.00 and added the full amount to balance. Normally about 280.00 is interest and the remainder goes to principal. It’s very confusing to me.
I’m still not certain what is going on, but if the entire $413 is being applied to your principal balance, it could be because of the federal student loan interest freeze. Due to the Covid-19, interest rates on federally held student loans are at 0% until at least October of this year.
Since our loans are thru Navient that are considered commercial. We only got 3 months of no payments back in 2020. We are accumulating interest. I think there needs to be a department outside of Navient that we can talk to about options. Thanks for your help.
My question is why did we get 3 months with no payments then we had to start back up in June I think? Did everyone regardless of the type of loan you gave get 3 months?
Hi Michael- thank you so much for your advice. Can you tell me what protections/relief would result by filing a report with the CFBP? Please see my note to Annette above re: my loan experience. Thank you!
Hi Jill – There are several potential benefits to the CFBP complaint. For starters, when the company responds, the person addressing your issue will normally have far more authority to fix things than the usual customer service representative does. Additionally, because the process is done under the supervision of a government oversight agency, lenders are more likely to be fair in their treatment. Finally, if there are a lot of complaints about the same company or practice, it could lead to a lawsuit brought by the CFPB on behalf of borrowers.
Hi Annette-I consolidated my Fed loans in 1999. I’ve paid $160k on a $60k loan and am not down to principal. Sallie Mae still owns loans, serviced now by Navient and guaranteed by the fed government. These loans are designed to fail and are guaranteed by the fed government. I’ve been writing many members of congress, etc. please do the same. The accounting practices are questionable. I’m asking for a federal audit of payments. While the rate is high at 8.125%…it’s not the rate. Interest is compounded daily I believe which makes the loan worse than a credit card, which explains why I’ve paid credit card debt and private loans faster. These loans go no where and need to be investigated. Thanks for sharing and good luck.
Can consolidated FFEL loans be turned into a direct Consolidation loan?
Hi Buckeye,
If you read some of the other comments, it looks like you are not the only one with this issue.
I try to respond to every question with answers based upon personal experience, however, this is an issue that I haven’t personally dealt with.
That being said, I can’t think of a reason that would prevent you from putting a consolidated FFEL loan into a federal direct consolidation loan.
However, I would encourage you to make sure it is the right move for you as you could lose progress towards student loan forgiveness as you would be creating a new loan.
Hope that helps!
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!
Lots of good questions here, and a few things to clarify.
First, the Department of Education has clarified things regarding PSLF and Covid-19 relief. The time during the payment and interest pause should count towards PSLF.
Second, and I could be misunderstanding your question, but PSLF isn’t a type of loan. PSLF refers to Public Service Loan Forgiveness which could apply to any federal loan. There are not any private loans eligible for PSLF.
Standard IBR forgiveness will take 25 years. Federal direct consolidation will restart that clock. However, federal direct consolidation may be necessary to qualify for PSLF, depend upon the loans that you have. This Guide to Federal Direct Consolidation should hopefully clear things for you.
Best wishes!
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.
No worries. Your questions make more sense.
Do you only have FFEL loans? I ask because the proposal I have most frequently heard regarding Covid-19 forgiveness would be a cap of $10,000.
I suppose it is possible that Coronavirus loan forgiveness might apply only to federally held loans and thus not include FFEL loans. This treatment would be similar to the current interest and payment freeze.
That all being said, we are speculating about the terms of a program that may never even exist. At this point, I don’t think I would give up on progress towards standard IBR forgiveness because there might be forgiveness that I might not qualify for based upon my current loans. However, it is possible that this approach could end up being a mistake… I just don’t see it as a likely sequence to be concerned about. Your best bet may to closely follow the news and developments. If this particular outcome starts to look more realistic, you can start the federal direct consolidation process.
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!
Yes. Your loan servicer should have that information available. You may also want to compare your payment records with what they tell you. It is possible they might make an error on the count.
If possible, you may want to get their response in writing.
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?
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: https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service/temporary-expanded-public-service-loan-forgiveness
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.
What if you had Ford direct loans (eligible) and the student loan company consolidated you under FFEL without telling you that was the program?
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.
These were Stafford subsidized and unsubsidized loans that were consolidated. The consolidation took place in 2003, not 2002.
Same thing happened to me with AES
We had loans from 1992 thru 1998 Sallie nMay sold them to Navient and now they are Commercial FFELP
Hard to take this advice seriously with all the errors.
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?
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.
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.
Everyone who takes student loans should find out about this when they take out the loans.