How to Consolidate Your FFEL Loans to Qualify for Biden Forgiveness
Insider experts pick the best products and services to help make smart decisions with your money (here’s how). In some cases, we receive a commission from our partners, however, our opinions are our own. Terms apply to the offers listed on this page.
- Some FFEL loans are federally backed student loans held by private student loan officers, and others are owned by the United States government.
- FFEL’s private loans are not eligible for Biden’s Tolerance Plan. You need to incorporate into a direct loan to qualify.
- Here’s how to apply for a direct loan consolidation, and the pros and cons of doing so.
You may miss out on student loan forgiveness just because you have the wrong type of loan.
President Biden’s $10,000 forgiveness plan, and $20,000 for Bill Grant recipients, applies only to student loans owned by the federal government. Some FFEL loans are not currently eligible.
“FFEL loans are federally backed loans that are funded by a private company,” explains student loan expert Sonya Lewis of the Student Loan Doctor.
Because some FFEL loans are offered by private lenders, they do not qualify for student loan forgiveness and other government protections, such as a pandemic payment halt. The Biden administration says it’s working on getting a tolerance for people with private FFEL loans, but there’s no specific timeline or information right now.
However, some FFEL loans are already owned by the US government through services such as Nelnet or MOHELA. These loans already qualify for student loan forgiveness; If your FFEL loans are on hold during the pandemic, they are eligible for forgiveness.
If your FFEL loans are privately owned, you will need to combine them with direct government owned loans to qualify for exemption. Heres 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 on studentaid.gov. You will need to be logged in to start the app, but you can also use a read-only app or a demo app to prepare for the real app.
You will need to submit:
- Your full name and any previous names
- Your social security number
- Date of birth
- Your permanent address
- Your phone number
- Your email address
- Employer’s name, address and phone number
You will also need to provide two references – two adults who live in the United States who do not live with you, and who have known you for at least three years. You will need to provide the following information about your references:
- Telephone number
- E-mail address
- mailing address
After filling in your information and providing references, the next section in the application will be titled Loans I want to consolidate. Here’s what this part of the app will look like:
Only consolidate loans that are not direct loans.
Once you have completed this section, you will fill in the next section, titled Loans I do not want to consolidate. It will include any other student loans you want the federal government to consider when determining the maximum repayment period.
Choose your new service
After you choose the loans that you want and do not want to consolidate, you will be asked to choose a new federal student loan service.
Here is a list of federal loan service providers and details about each of them from the Better Business Bureau:
Signing a new promissory note
Just like you did when you went to college, you will have to sign a promissory note, which is an agreement between you and the government that states that you will pay your debts. “Basically, you’re creating a new loan with this government, so you should look at it that way,” Lewis says.
Your direct consolidation application will involve a difficult credit inquiry, which means you may see a five to 30 point drop in your credit score, Lewis says.
What are the advantages of consolidating my FFEL loans?
If you combine your FFEL loans, you will be eligible for the $10,000 Biden Student Loan Forgiveness Plan, or $20,000 if you receive a Pell Scholarship (provided you meet the income limit of $125,000 per year for an individual or $250,000 for spouses who They submit their requests. Combined taxes).
Additionally, you may qualify for lower monthly payments. FFEL loans, which were discontinued in 2010, are only eligible for specific federal income-driven payment plans. By incorporating into a direct loan, you become eligible for more IDR options.
What will I lose if I collect FFEL student loans?
If you pay your FFEL loan through an income-based payment plan, all payments you made will be deleted for forgiveness if you consolidate now. You will have to start the clock again once your student loans consolidate.
The same usually applies to Public Service Loan Forgiveness, although your payments will be eligible under the PSLF Temporary Waiver through the end of October.
Here’s how long it takes for federal student loans to be forgiven under specific IDR plans: