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FFEL Consolidation Loans
FFEL Consolidation
Loans or Federal Family Education Loan (FFEL) Program
A Federal Family
Education Loan (FFEL) Program or FFEL Consolidation Loan is a
guaranteed and insured loan designed to help students and
parents who have borrowed federal
funds to consolidate their Stafford Loan, Unsubsidized Stafford
Loan, PLUS Loan (Parent Loan
for Undergraduate Students), into one consolidation loan with
single repayment terms
and schedule. |
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The U.S. Department of Education administers the Federal Family
Education Loan (FFEL) Program and the Federal Direct Loan
(Direct Loan) Program, therefore, Most federal student loans and
FFEL PLUS Loans can be consolidated.
Other federal student/parent loans such as Federal Perkins Loans
may also be consolidated. |
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If in doubt or you are unsure you should contact a participating
lender who will give you a complete list of eligible loans.
The eligibility rules and loan amounts are identical under both
FFEL and Direct Loan programs however, repayment plans are
somewhat different. |
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During the application process You will required to sign a new
promissory note establishing a new interest rate and repayment
schedule.
Upon successful application to a bank, credit union, or other
lender that participates in the program your Stafford Loan,
Unsubsidized Stafford Loan and PLUS Loans and any other eligible
loans will be consolidated into a single Federal Family
Education Loan monthly payment plan.
After the loan has been disbursed the credit bureaus will be
advised that your account has a zero balance.
Who is eligible for a FFEL Consolidation Loan?
You can get a FFEL Consolidation Loan during your grace period
or once you have entered repayment of your Stafford Loan,
Unsubsidized Stafford Loan and PLUS Loans.
If you're in default on a federal student loan, you may be able
to receive a FFEL Consolidation Loan. For more detailed and
specific information you should consult with an authorized
lender that participates in the FFEL Consolidation Loan Program.
Depending on the type of loans you are consolidating, you may
receive either a Subsidized
FFEL Consolidation Loan, or an Unsubsidized FFEL Consolidation
Loan,
What's the interest rate on a FFEL Consolidation Loan?
By law, the interest rate for a FFEL Consolidation Loan has been
the weighted average of the original interest rates of the loans
being consolidated, rounded up to the nearest whole percent.
For more information on the current interest rate, check with a
lender that participates in the FFEL Consolidation Program.
Who May Apply:
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Stafford:
Individuals who are undergraduate, vocational, or graduate
students accepted for enrollment at least half-time in
participating schools.
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Unsubsidized
Stafford: Individuals who are undergraduate, vocational, or
graduate students accepted for enrollment at least half-time
in participating schools.
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PLUS:
Individuals who are parents of dependent undergraduate
students accepted for enrollment at least half-time in
participating schools. Beginning July 1, 2006, graduate
students are also eligible.
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Consolidation:
Individuals who have outstanding student loans and are in a
grace period or repayment status or those who have defaulted
but have made satisfactory arrangements to repay their
loan(s).
Effective July 1,
2008, amendments were made by the CCRAA to the FFEL provisions
of the Higher Education Act (HEA). These amendments will allow a
FFEL-only borrower to consolidate or reconsolidate their loan(s)
into the Direct Loan program in order to qualify for public
service loan forgiveness.
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To qualify
for the Public Service Loan Forgiveness Program, a
borrower must:
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Make 120
monthly payments on the eligible Federal Direct Loan
on or after Oct. 1, 2007;
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Be
employed in a public service job as defined in the
CCRAA during the time he or she makes the qualifying
monthly payments;
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Be
employed in a public service job as defined in the
CCRAA at the time the Secretary forgives the loan;
and
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Make
qualifying payments under one of (or some
combination of) the following:
Income contingent repayment plan;
Income-based repayment plan (not available until
2009);
One of the other Direct Loan repayment plans under
which the borrower paid a monthly amount that is not
less than what the borrower would pay under a 10
year repayment plan.
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