Q: Are FFEL Consolidation Loans eligible for any student loan forgiveness programs?

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Federal student loans made under the Federal Family Education Loan Program are eligible for loan forgiveness. And this includes FFEL consolidation loans.

FFEL Program Loans are eligible for:

  • Repayment plan forgiveness
  • Total and permanent disability cancellation and
  • the Teacher Loan Forgiveness program

I've written about TPD Cancellation and the Teacher Loan Forgiveness requirements previously. So I won't talk about them in this post. I will, however, go over repayment plan forgiveness.

But before I do, let's talk about the one loan forgiveness program FFEL loans aren't eligible for:

The Public Service Loan Forgiveness program.

Coronavirus & FFELP Loans

Back in March, in response to the COVID pandemic, the federal government, as part of the CARES ACt, suspended collections and froze the interest rate from accruing on student loan debt. (Sadly, they did nothing for private student loans.)

But they only did those things for loans owned by the Department of Education.

Not all federal student loans are owned by the Department. Perkins Loans and FFEL Loans are sometimes owned by the school you attended or a guaranty agency.

If your loans are owned by someone other than the Department of Education, and you're having trouble making payments, contact the loan holder and ask them for a deferment or forbearance.

Is FFELP a Federal Loan?

FFELP Loans are federal student loans. And that's true even if your loan was made by a private lender.

The Department of Education used to administer three main student loan programs:

  1. The William D. Ford Federal Direct Loan Program
  2. The Perkins Loan Program
  3. The Federal Family Education Loan Program (usually called Stafford Loans)

In 2010, the Department of Education stopped making loans under the FFEL Program.

Public Service Loan forgiveness for FFEL Loans

The PSLF program will forgive your federal student loan debt, but not for all types of loans.

It only forgives federal loans made under the Direct Loan program.

There is a workaround, however.

Loan consolidation.

By consolidating your FFEL loans, you're turning them into a Direct Loan.

And when that happens, they're now eligible to get your student loans forgiven after 10 years under the Public Service Loan Forgiveness Program.

After you consolidate

Your work isn't done after you get a Direct Consolidation Loan.

You still have to meet the other program requirements. Namely, you have to:

  • make 120 qualifying payments
  • make those payments under a qualifying repayment plan
  • work for a qualifying employer and
  • work full-time.

You make a qualifying payment when you make your monthly payment within 15 days of the due date. You make payments under a qualifying repayment plan if you make your payments under the Standard Repayment Plan or one of the other income-driven repayment options. Finally, a qualifying employer is either a government or non-profit organization (e.g., 501(c)(3)).

Once you meet those requirements, then the US Department of Education is supposed to forgive the remaining balance on your Direct Loans.

I say "supposed to" because the Department of Education and its loan servicer, FedLoan, have granted few loan discharges to borrowers.

Parent Plus Loan borrowers

Be careful about consolidating your Parent Plus loan with your other federal loans. If you do that, your loan payments may end up being a lot higher than they would be if you left the Plus Loan out of the consolidation. This is because Parent Plus Loans, and any loan consolidation that includes a Parent loan, aren't eligible for the repayment plans that offer the lowest monthly payments (IBR, REPAYE, and PAYE). Instead, they're eligible only for the income-contingent repayment plan (ICR).

Repayment plan forgiveness

The other forgiveness option for FFEL loan borrowers comes at the end of some loan repayment plans.

Each of the income-driven repayment plans will forgive your remaining federal student debt after you make a certain number of student loan payments.

Here's how that works.

Let's say you're in the best repayment plan for FFEL loans: the income-based repayment plan.

Under that plan, the federal government will forgive your loan balance after 300 monthly payments (25 years).

How to what types of loans you have

You have a couple of options to find out what types of loans you have:

For my clients, I always choose the second option. That website gives me a complete picture of all of their federal loans. It also lets me review their student loan repayment options and estimate their monthly payment amounts.

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I'm a student loan lawyer that helps people like you with their federal and private student loans wherever they live.

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