Special Direct Consolidation Loans | 02.10.12
In a recent State of the Union Address, President Obama mentioned a Special Direct Consolidation Loan available to some borrowers with federal loans. This loan is not your typical Direct Consolidation Loan, and is only available for a brief period this year. This is a great opportunity for borrowers with the old, FFEL loans, as it will make managing repayment a much simpler task. Let’s take a look at how this loan works.
Background
First, let’s understand a little bit about historical student loans. Before Direct Loans came into play, the Federal Family Education Loan (FFEL) Program included four types of loans: Stafford, Unsubsidized Stafford, PLUS, and Consolidation. These loans, while still federally guaranteed loans, were made by private lenders and serviced privately. Now under the Direct Loan Program, federal loans are funded directly through the government (though there are four companies who service the loan on behalf of the Dept. of Education).
How Special Consolidation Loans Work
For borrowers who hold loans under both the FFEL and Direct Loan Programs, repayment can be difficult because FFEL loans are held by one or more lenders, while Direct loans are held by another. This Special Direct Consolidation opportunity will allow borrowers who have both types to consolidate their FFEL loans into a Direct loan, allowing all loans to be serviced by the same company.
Benefits
- One loan servicer, one payment
- Public Service Loan Forgiveness eligibility
- 0.25% interest rate reduction (another 0.25% reduction if you choose auto-debit)
- Change from Variable to Fixed rate
Eligibility
Borrowers must have both an FFEL and a Direct Loan in order to take advantage of this opportunity, however, only the FFEL loans are eligbile. Additionally, the loans must be in good standing (not in default or bankruptcy) and in either grace, repayment, deferment, or forbearance.
How to Get Started
Borrowers who are eligible to consolidate under this loan will be contacted by their current Direct Loan Servicer with instructions. Notifications of eligibility began January 17, 2012. This option will only be available until June 30, 2012, so make sure to take action as soon as you hear from your servicer if you plan to participate.
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What are the disadvatages of the Special Direct Loan Consolidation Program?
I’m about to graduate from grad school with a huge amount of debt (think upwards of 150k) spread out over ten loans. I’ve got one FFEL loan, multiple stafford loans (subsidized and unsubsidized), and a few direct plus graduate loans. All the loans are held by Great Lakes, with the exception of one stafford that’s held by Sallie Mae. Do I qualify for the Special Direct Consolidation?
If you qualify, you should have been contacted by your servicer. I would suggest contacting Great Lakes for more information.
I qualified for the special direct loan but im confused… I still owe DOE the same amount and I still owe Sallie Mae the same amount but now I have another amount in my sallie mae thats a new loan anyone know why???
If I am not able to consolidate all my gov loans under the Special Consolidation does that mean that only my private loans will be consolidated? Can you consolidate your other loans that do not qualify for the Special Consolidation program under the Traditional consolidation program?
If you don’t qualify for the special consolidation loan, you can still consolidate federal loans into a regular Direct Consolidation Loan (assuming you meet the requirements). Private loans must be consolidated separately either way. To start the process for a Direct or Private consolidation loan, try StudentLoanConsolidator.com.
If I was not able to finish college due to the cost being to expensive, can I still consolidate the student loans that I have. They are private student loans. I have about $80,000. in private loans and about 12,000. in federal loans.
Yes, student loans can be consolidated even if you did not finish your degree program. For more information and to get started on the process, visit StudentLoanConsolidator.com.
I would like to consolidate all the loans that I have into one and start paying them as soon as April 2012. I have several government loans and some private loans. I am not paying on my loan right now because I had an accident and could not work for a year. i will like to make arrangements to start paying now.
To consolidate your federal loans, you will need to go through the Department of Education’s Direct Loan Consolidation. To find your private consolidation options, visit StudentLoanConsolidator.com.
I am not attending school this semester, and will probably start paying my student loan in June 2012, I would like to consolidate my Stafford and unsubsidized loans, As of this date I haven’t been contacted about my loans, except to complete the exit. Should I contact Sallie Mae!
No, the only available consolidation loan for federal loans is a Direct Consolidation Loan through the Department of Education. Learn more about this option here: http://www.loanconsolidation.ed.gov/
Does a new borrower get low and fixed interest rate?
I would like to learn more about the loan consolidation program. Do I need to contact anyone or will the someone contact me about it?
If you are eligible, you will be contacted by your loan servicer. If you simply want to know more, you can call the Department of Education at 800-433-3243.