The clock is ticking for Parent PLUS borrowers considering the double consolidation loophole. As a critical deadline approaches, understanding the details of this process is essential.
For many borrowers, double consolidation is a strategy that makes loan repayment far more affordable, but acting quickly and correctly is more important than ever.
Ask the Sherpa: Is Double Consolidation a Legitimate Move? When double consolidation first entered the national discussion it was because a few borrowers found a flaw in the Department of Education systems that allowed Parent PLUS loans to sign up for preferred IDR plans like IBR, PAYE and SAVE.
I warned borrowers that this was a flaw in their system and it could be fixed at any point.
Now, the Department of Education has acknowledged the process and created a deadline for borrowers to take advantage of this loophole. They are not offering guidance for how to take advantage of the process, but at this point, they have signed off on it.
Is It Already Too Late?
While there is still likely time to complete a double consolidation, there is no guarentee. The unusual aspect of this deadline is that borrowers must finish the entire process by July 1, 2025, not just start it. This means that any delays or errors could push the timeline beyond the firm deadline.
Double consolidation is a lengthy process because it requires borrowers to complete two rounds of consolidation, and rely on postal service delivery and manual paper processing to be successful. For this reason, getting started right away is essential.
Double Consolidation: The Right Move for Most
Double consolidation makes sense for the vast majority of Parent PLUS borrowers. This strategy allows borrowers to escape the limited repayment options of Parent PLUS loans and opens access to most of the other Income-Driven Repayment (IDR) plans. In almost all cases, pursuing double consolidation will lower monthly payments and increase the flexibility of repayment.
Put simply, double consolidation offers signficant monthly savings and more potential student loan forgiveness.
However, there is one small but notable notable exception: borrowers who are closing in on forgiveness through Income-Contingent Repayment (ICR) before January 1, 2026. If you’re in this group, it may be better to stay the course rather than starting the double consolidation process, as the return of the tax on student loan forgiveness is yet another critical deadline not to miss.
The Impact of SAVE Litigation on Double Consolidation
There’s been a lot of discussion about the potential outcomes of the SAVE litigation and what it means for borrowers.
Fortunately, the effectiveness of double consolidation remains largely intact, regardless of what happens with the lawsuit. For most borrowers, double consolidation will still provide significant benefits, although the specifics of how much it helps may vary based on the outcome of the SAVE litigation. The Parent PLUS double consolidation loophole remains an effective tool for reducing payments, even as the SAVE plan faces likely elimination.
Double Consolidation and Retirement Concerns
For borrowers nearing retirement, double consolidation can be an especially valuable tool. Many Parent PLUS borrowers worry about whether they can afford to retire while still facing large monthly loan payments. By accessing lower payment options through double consolidation, retirees can reduce their financial stress and make their loans more manageable during retirement.
The Unusual Deadline for Double Consolidation
Typically, deadlines for student loan programs relate to submitting the application. However, the deadline for double consolidation is different—borrowers need to complete the entire process by July 1, 2025.
This distinction makes timing particularly crucial, as any delays could jeopardize your ability to benefit from double consolidation. If you’re considering this strategy, it’s vital to act now and ensure the process is moving forward without setbacks.
Tips for Completing the Double Consolidation Process
Successfully navigating double consolidation requires careful attention to detail. If you have any questions about the process, please reach out as a mistake could be the difference between beating the deadline or missing it. Here are some tips to make sure you meet the deadline:
- Error-Free Applications Are Essential: When applying for consolidation, errors can lead to delays that might make it impossible to complete the process in time. Be thorough and double-check every detail to avoid mistakes.
- Sign Up for Balance-Based Plans When You Apply: When you submit your consolidation application, make sure to enroll in a balance-based repayment plan. This step can help ensure that you maximize the benefits of double consolidation and keep the process moving smoothly. You can always enroll in an IDR plan once the double consolidation is finished.
Act Quickly But Carefully
Double consolidation is an opportunity that I’ve never seen in over a decade of working with student loan borrowers.
Because it is a loophole, the Department of Education hasn’t offered any guidance on successfully completing the process and borrowers often have rely on forums and internet discussion from borrowers who have successfully completed things.
Servicers haven’t gotten any training on this process, and it is highly unlikely that there will be any accoutability for any bad information that is provided. As such, it is critical to do your homework to give yourself the best chance of success.
