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How to consolidate your FFEL student loans to qualify for up to $20,000 in forgiveness

Submitted by Tech Insider on September 23, 2022 - 10:28am

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Two college graduates in their caps and gowns looking sad and disappointed.
Only 6.7% of people eligible for Public Student Loan Forgiveness actually apply for it.


  • Some FFEL loans are federally-backed student loans held by private student loan servicers, and others are held by the US government.
  • Private FFEL loans are not eligible for Biden's forgiveness plan. You need to consolidate to a Direct loan to qualify.
  • Here's how to apply for Direct loan consolidation, and the pros and cons of doing it.

You could miss out on student-loan forgiveness simply because you have the wrong loan type.

President Biden's $10,000 forgiveness plan, and $20,000 for Pell Grant recipients, only applies to student loans owned by the federal government. And some FFEL loans are not currently eligible.

Student loan expert Sonia Lewis of the Student Loan Doctor explains, "FFEL loans are federally-backed loans that were funded by a private company."

Because some FFEL loans are serviced by private lenders, they are not eligible for student-loan forgiveness and other government protections, like the pandemic payment pause. The Biden administration says it's working on getting forgiveness for people with privately-held FFEL loans, but there's no specific timeline or information at the moment.

However, some FFEL loans are already held by the US government through servicers like Nelnet or MOHELA. Those loans already qualify for student-loan forgiveness; if your FFEL loans have been on pause during the pandemic, they're eligible for forgiveness.

If your FFEL loans are privately held, you'll need to consolidate them into Direct loans that are owned by the government to qualify for forgiveness. Here's how to do it.

How to fill out a Direct loan consolidation application

The first step is to fill out a Direct loan consolidation application at studentaid.gov. You'll need to login to start the application, but you can also use a read-only or demo application to prepare for the real application.

You'll need to provide:

  • Your full name and any former names
  • Your Social Security number
  • Your date of birth
  • Your permanent address
  • Your telephone number
  • Your email address
  • Your employer's name, address, and phone number

You'll also need to provide two references — two adults who live in the US who do not live with you, and who have known you for at least three years. You'll need to provide the following information about your references:

  • Phone number
  • Email address
  • Mailing address

After filling out your information and providing references, the next section in the application is titled Loans I want to consolidate. Here's what this part of the application will look like:

A screenshot of the sample Direct consolidation online application from studentaid.gov.
This is the part of the Direct consolidation application where you choose which loans you want to consolidate.

Only consolidate loans that are not Direct loans. 

Once you've finished with that section, you'll fill out the next section, titled Loans I don't want to consolidate. You'll list any other student loans you want the federal government to consider when deciding your maximum repayment period.

Choose your new servicer

After choosing the loans you do and don't want to consolidate, you'll be asked to choose a new federal student loan servicer.

Here's a list of federal loan servicers, and details about each one from the Better Business Bureau:

Federal loan servicer BBB accreditation BBB rating Customer rating Complaints closed in the last 3 years
Great Lakes Educational Loan Services, Inc. Not accredited N/A 1/5 stars 61
Edfinancial Accredited since 2008 B+ 1/5 stars 75
MOHELA Accredited since 2010 A+ 1.1/5 stars 42
Aidvantage Not accredited C- 1/5 stars 34
Nelnet Accredited since 2005 A+ 1.4/5 stars 291
OSLA Servicing Not accredited N/A 1/5 stars 16
ECSI Not accredited B- 1/5 stars 68

Sign a new promissory note

Just like you did when you went to college, you'll have to sign a promissory note, an agreement between you and the government stating that you will pay your debts. Lewis says, "Basically, you're originating a new loan with this government, so you should look at it as such."

Your Direct consolidation application will include a hard credit inquiry, which means you might see a five- to 30-point drop in your credit score, says Lewis. 

What are the pros of consolidating my FFEL loans?

If you consolidate your FFEL loans, you will become eligible for Biden's $10,000 student-loan forgiveness plan, or $20,000 if you received a Pell Grant (provided you meet the income threshold of $125,000 per year for an individual or $250,000 for married couples who file their taxes jointly).

Additionally, you may be eligible for lower monthly payments. FFEL loans, which were discontinued in 2010, are only eligible for select federal income-driven repayment plans. By consolidating into a Direct loan, you become eligible for more IDR options.

What will I lose if I consolidate my FFEL student loans?

If you were paying your FFEL loan with an income-based repayment plan, all of the payments you've made toward forgiveness will be erased if you consolidate now. You would have to start the clock over again once you consolidate your student loans.

The same typically goes for Public Service Loan Forgiveness, though your payments will qualify under the temporary PSLF waiver until the end of October. 

Here's how long federal student loans take to be forgiven under specific IDR plans:

Repayment plan or forgiveness program Forgiveness date
Revised Pay As You Earn (REPAYE) 20 years for undergraduate loans, 25 years for graduate loans
Pay As You Earn Plan (PAYE) 20 years
Income-Based Repayment (IBR) 20 years
Income-Contingent Repayment (ICR) 25 years
Public Service Loan Forgiveness Program (PSLF) 10 years
Perkins Loans 5 years
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