Consolidate an FFELP Loan to a Direct Loan: How to Do It

#1 Student loan lawyer

Updated on March 2, 2024

FFEL Loans, also known as Federal Family Education Loans, can be consolidated into a Direct Consolidation Loan, providing access to income-driven repayment plans like Revised Pay As You Earn and Income-Based Repayment. This consolidation also enables eligibility for loan forgiveness programs, such as Public Service Loan Forgiveness and Income-Driven Repayment Plan Forgiveness.

Usually, consolidation involves risks, like losing previously earned PSLF and repayment plan forgiveness credit. But the federal government has waived this penalty for those who consolidate before the end of 2023.

By consolidating before the deadline, borrowers can benefit from the IDR Account Adjustment, which maintains qualifying payments for loan forgiveness programs and grants bonus credit for certain forbearance and deferment periods.

Commercially-held FFEL loans — i.e., those loans with AES, Navient, PHEAA, and so on, can be consolidated into a Direct Consolidation Loan without including other eligible loans or even if the only loan they have is an FFEL Consolidation Loan.

For a limited time, all FFEL borrowers, including those with a current FFEL Consolidation Loan, are eligible for consolidation.

Related: Is Navient a Federal Loan?

Should I consolidate my FFEL Loans into a Direct Loan?

Consolidating your FFEL Loans into a Direct Consolidation Loan can offer benefits, such as pandemic-related forbearance that has suspended payments and interest on federal student loans for three years. With President Biden extending the payment pause until next summer, consolidation may provide relief while waiting for the Supreme Court’s decision on loan cancellation.

Also, consolidating your FFEL Loans into a Federal Direct Consolidation Loan may help you reach forgiveness sooner under the PSLF Program and IDR Waiver. Both programs grant bonus credit towards forgiveness for consolidated loans.

For parents with loans for their children, consolidating FFEL Loans into a Direct Loan makes Parent PLUS Loans eligible for the Income-Contingent Repayment (ICR) plan. ICR links monthly payments for the new Direct Consolidation Loan to discretionary income and family size, potentially lowering payments to zero, which could benefit struggling parents.

Related: Parent PLUS Loan Forgiveness Retirement

Can I consolidate an FFELP Consolidation Loan to a Direct Loan?

Yes, you can consolidate an FFEL Consolidation Loan into a Direct Loan through the Direct Loan Consolidation process. Regardless of your credit score, account status, or whether you have another federal student loan, you can convert your FFELP Loans to a Direct Loan.

The only exception is if you are in default and actively being garnished.

But during the pandemic, all wage garnishments for defaulted federal student loans were halted, letting you consolidate your FFEL Loans into a Direct Loan today, even if your wages were being garnished before the pandemic.

Related: How to Consolidate Defaulted Student Loans

Is it too late to consolidate an FFEL Loan to a Direct Loan?

It’s too late to consolidate privately-held FFEL Loans to a Direct Loan so you can qualify for the PSLF Waiver and President Biden’s student debt cancellation plan. But you still have time to consolidate to reap the benefits of the IDR Waiver. This program gives you retroactive credit for any prior loan payments and time spent in deferment or forbearance towards a 20 or 25-year repayment plan forgiveness.

The PSLF Waiver ended on Halloween, and the White House scaled back eligibility for Presiden Biden’s relief plan the same day six Republican-led states sued the president to block his student loan forgiveness program from taking effect.

The Biden administration first said that borrowers whose federal student loans were guaranteed by the government but held by private lenders would be eligible for the one-time forgiveness action if they consolidated their debt into the Direct Loan Program. But the day after a legal challenge in Missouri was filed, the U.S. Department of Education reversed course and, in doing so, sacrificed hundreds of thousands of borrowers with privately-held federal student loans.

According to the Federal Student Aid website, borrowers must have consolidated commercially held FFEL Program Loans before Sep. 29 to be eligible for the president’s debt relief plan.

How to consolidate FFEL Loans to Direct Loans

To consolidate your FFEL Loans to Direct Loans, follow these steps:

  1. Visit and log in using your FSA ID.

  2. Click “Loan Repayment” and then “Consolidate My Loans.”

  3. Give about 30 minutes to complete the consolidation application.

  4. Select the loans you wish to consolidate, including any FFEL Program or Federal Perkins Loans.

  5. Choose a student loan servicer, which is a company responsible for handling billing and other services on your account.

  6. Pick a repayment plan, such as any of the different types of income-driven repayment or another repayment option that fully pays your loan balance. If you’re seeking loan forgiveness, select an IDR option.

  7. Carefully read the promissory note and repayment terms before submitting the form online.

  8. Continue making student loan payments or ask that your account be put into forbearance until your loan servicer confirms the consolidation is complete.

For any questions regarding student loan consolidation, contact the Federal Student Aid Information Center at 1-800-433-3243, or schedule a time to speak with me.

Is FFEL consolidation the same as student loan consolidation?

FFEL Consolidation refers to the consolidation of Federal Family Education Loans (FFEL) through the Federal Family Education Loan Program. Even if you already have an FFEL Consolidation Loan, it’s still possible to consolidate your commercially-held FFELP Stafford Subsidized and Unsubsidized Loans into a Direct Consolidation Loan.

The Direct Consolidation Loan Program is now the sole option for consolidating federal student loans, including FFEL loans.

Once you’ve consolidated your loans, your new loan will have a fixed interest rate for the life of the loan. The rate will be based on the weighted average of your current loans rather than your credit score. This differs from private student loan refinance, where your interest rate is based on your creditworthiness.

FFEL consolidation differs from private student loan consolidation

FFEL Consolidation involves consolidating Federal Family Education Loans through the Direct Loan Program, while private student loan consolidation involves consolidating federal or private student loans through a private lender. As a result, FFEL consolidation offers benefits such as access to federal student loan repayment plans, loan forgiveness programs, and deferment and forbearance options that aren’t available with private student loan consolidation.

Related: Will Graduate Student Loans Be Forgiven?

Bottom Line

Consolidating FFEL Loans into a Direct Loan may be the best option for you to take advantage of better repayment and forgiveness options. Although the window is quickly closing, there is still time to consolidate student loans before the end of 2023. Taking the time to consolidate now could make all the difference in paying off your student loan debt.

Understanding all the options available and the potential consequences of consolidating your loans is important. If you are considering consolidation, schedule a time to speak with me to help guide you through the process — or do it for you. That way, you can ensure you get the right solution for your financial future.

UP NEXT: FFEL Loan Forgiveness After 20 Years

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