Consolidating all school loans

WARNING: It is very dangerous to consolidate federal loans into a private consolidation loan.

You will lose your rights under the federal loan programs once you choose to consolidate with a private lender.

Although all of these different loans may be consolidated, you must have at least one outstanding FFEL or Direct Loan to obtain a Direct Consolidation Loan.

APPLYING FOR DIRECT LOAN CONSOLIDATION All borrowers must now apply for Direct Loan consolidation using the web site. It is very important to review this sheet and check to make sure all of the loans you wanted to consolidate are included in the new consolidation loan.

(Click espanol to find a Spanish version of the on-line application). Be sure to meet the deadline for responding if you think there are problems with the consolidation or if you have decided you do not want to go forward.

Using Studentloans.gov: You will need to sign in using your personal identifiers and PIN. You have four different “consolidation servicers”: Fed Loan Servicing (PHEAA), Great Lakes, Nelnet and Sallie Mae (now called Navient). (“Joint and several liability” means that both borrowers are fully liable for the full amount of the debt). Not surprisingly, this caused a lot of problems for borrowers and Congress eliminated the program as of July 1, 2006.

The electronic application consists of five steps: 1. If may make this choice on-line or if you are sending in a paper application, you should send directly to the servicer you choose. The Department provides some general information about servicer performance in the on-line data center and quarterly performance reports. There are still many borrowers struggling with joint consolidation loans.

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