Double Consolidation Still Helps Lower Monthly Payments

#1 Student loan lawyer

Updated on June 10, 2024

Quick Facts

  • The double consolidation loophole allows parents with Parent PLUS loans to significantly reduce their monthly payments and qualify for loan forgiveness, but the opportunity closes on July 1, 2025.

  • As of May 2023, Aidvantage is the only servicer processing consolidation applications. If you’ve already submitted an application to Nelnet, follow up to ensure it’s still being processed.

  • If you’re submitting two consolidation applications in the first round, stagger your submissions to Aidvantage by a couple of weeks to avoid having them combined inadvertently, and keep a close eye on your email inbox and physical mail for updates.

  • When applying for your first consolidation, choose your loan servicer, select the Standard Repayment Plan (temporarily), and submit your applications via fax or postal mail to Aidvantage, confirming receipt after 2-3 business days.

If you’re a parent struggling with high monthly payments on your Parent PLUS loans, you may have heard about the double consolidation loophole. This strategy allows you to significantly reduce your monthly payments and qualify for loan forgiveness, but time is running out to take advantage of this opportunity.

The double consolidation loophole is set to close on July 1, 2025. To ensure you don’t miss out, start the process by March 2025 to account for processing times. The recent changes in loan servicers handling consolidation applications have also added an extra layer of complexity to the process.

In this guide, we’ll walk you through the steps to complete the double consolidation process, including:

  • Gathering your loan information

  • Choosing your consolidation strategy

  • Applying for your first consolidation with Aidvantage

  • Applying for your second consolidation and enrolling in the SAVE plan

  • Maintaining your eligibility for loan forgiveness

We’ll also cover important considerations, such as staggering your applications to Aidvantage and what to do if you’ve already submitted an application to Nelnet.

By following this guide and paying close attention to the details, you can confidently navigate the double consolidation process and secure a more manageable financial future for yourself and your family.

Thumbnail of Stanley Tate with text on screen.

Double Consolidation Loophole: Slash Your Parent PLUS Payments

How to Apply for the Parent PLUS Loan Double Consolidation Loophole

The double consolidation loophole for Parent PLUS Loans is set to close on July 1, 2025. To ensure you don’t miss out on this opportunity, start the process by March 2025 to account for processing times.

Here’s how to complete the double consolidation process:

Step 1: Gather Your Loan Information

To start the double consolidation process, you’ll first need to gather detailed information about each of your existing Parent PLUS loans.

There are a few ways to collect the information for each of your Parent PLUS loans:

  • Option 1: Download your TXT file from StudentAid.gov. This file lists your student loan data, including time in repayment, deferment, forbearance, repayment plan, and more.

  • Option 2: Start the Direct Consolidation Loan Application on the Federal Student Aid website, but don’t complete it. This will give you access to your loan details, such as the loan holder, account number, estimated payoff amount, and first disbursement date for each loan. To find the loan code, refer to the paper application instructions.

  • Option 3: Click through each loan on StudentAid.gov to gather the information manually.

Regardless of the method you choose, make sure to collect these details for each Parent PLUS loan:

  • Loan servicer

  • Loan balance

  • Interest rate

  • Loan status (note if any loans are in deferment, as they might not be included in the consolidation)

  • Loan type code (found in the paper application instructions)

  • Loan account number

  • First disbursement date

Having this information readily available will streamline the consolidation process and ensure all your loans are properly included.

Keep in mind that starting the online application won’t slow down or interfere with the paper application process as long as you don’t submit the online form.

Step 2: Choose Your Consolidation Strategy

The specifics of your double consolidation will depend on your unique loan situation. There are two common scenarios:

Scenario A: Multiple Parent PLUS Loans

If you have two or more Parent PLUS loans:

  • Consolidate them into two separate Direct Consolidation Loans.

  • Then, consolidate those two loans together.

Scenario B: Parent PLUS Loan(s) and Other Federal Loan(s)

If you have at least one Parent PLUS loan and at least one other federal loan:

  1. First, consolidate your Parent PLUS loan(s).

  2. Then, consolidate the resulting Direct Consolidation Loan with your other federal loan(s).

Scenario C: FFEL Consolidation Loan That Paid Off Parent PLUS Loans

Suppose you previously consolidated your Parent PLUS loans into a Federal Family Education Loan Consolidation Loan and don’t have another federal student loan to consolidate. In that case, you may still take advantage of the double consolidation loophole.

The rules let you consolidate an FFEL Consolidation Loan into the Direct Loan Program, even if it’s your only loan, as long as you might apply for the Public Service Loan Forgiveness (PSLF) Program.

Note: You need not have definite plans to work in public service or apply for PSLF to qualify for this exception. However remote, the possibility of applying for PSLF is enough to let you consolidate your FFEL Consolidation Loan and take advantage of the double consolidation strategy.

Step 3: Apply for Your First Consolidation

As of May 17, 2023, Aidvantage is the only servicer processing consolidation applications, as Nelnet no longer accepts new applications. Aidvantage handles the consolidations for MOHELA and EdFinancial. Once the consolidation is complete, your loans will be passed along to the respective companies.

With this change in the consolidation application process, you might wonder if double consolidation is still possible. Rest assured, you can still move forward with double consolidation, but you must designate different servicers when submitting your first round of consolidation applications.

For each set of loans you’re consolidating in this first round:

  1. Choose your loan servicer

  2. Select the Standard Repayment Plan (this is temporary)

  3. Submit your applications via fax or postal mail to Aidvantage and confirm receipt after 2-3 business days

If you’re consolidating multiple loans with Aidvantage, it’s important to stagger your applications by a couple of weeks to avoid having them combined inadvertently. Keep a close eye on your email inbox and physical mail for updates. Aidvantage’s processing times may be slower, and their emails may end up in spam folders.

If you’ve already submitted an application to Nelnet before their policy change, follow up to ensure your application is still being processed.

The first consolidation typically takes 4-6 weeks to complete. Stay careful throughout the process, and please reach out to your loan servicer or a trusted financial professional if you have any questions.

Step 4: Apply for Your Second Consolidation

Once your first consolidation is complete, it’s time to bring it all together and apply for the SAVE Plan simultaneously.

Fill out a paper Direct Consolidation Loan Application to combine your two new Direct Consolidation Loans. When completing this application:

  • Choose your preferred loan servicer (EdFinancial, MOHELA, or Aidvantage) for your final consolidated loan. Unfortunately, Nelnet is not currently available as an option.

  • Do not select a repayment plan on the consolidation application.

Alongside your Direct Consolidation Loan Application, complete a paper Income-Driven Repayment Plan Request to enroll in the SAVE plan. When completing the IDR Plan Request:

  • Select the SAVE plan as your chosen IDR plan.

  • Provide your income information and family size, as these details are necessary to calculate your new monthly payment under the SAVE plan.

  • If you’re married, filing taxes jointly, and would like your payment based on your income only, you can do so by carefully following the instructions on the paper IDR Plan Request.

Submit your completed Direct Consolidation Loan Application and IDR Plan Request to Aidvantage, regardless of which loan servicer you chose for your final consolidated loan.

Note: While it is possible to complete the consolidation application online, StudentAid.gov does not allow borrowers with Parent PLUS loans to apply for the SAVE plan directly. This is why we recommend using paper applications for both the consolidation and IDR Plan Request, as it streamlines the process and ensures you can enroll in the SAVE plan.

Once your final consolidation is processed and your SAVE plan enrollment is confirmed, your loans will be combined into a single Direct Consolidation Loan with a new, more manageable monthly payment based on your income and family size.

Related: Do Parent PLUS Loans Qualify for SAVE?

Step 5: Stay the Course

Congratulations! You’ve successfully navigated the double consolidation process. To make the most of this opportunity, there are a few key things to remember:

Annual Recertification: To maintain your eligibility for the SAVE Income-Driven Repayment (IDR) plan, you must recertify your income and family size every year. This is because your monthly payment under the SAVE plan is based on your current financial situation, which may change.

The recertification process typically involves:

  • Submitting an updated IDR Plan Request form

  • Providing current income documentation and family size information

  • Completing the process before the deadline specified by your loan servicer

If you fail to recertify on time, your monthly payment will revert to what it would be under the Standard Repayment Plan, which could be significantly higher than your SAVE plan payment.

Other Important Reminders:

  • Pay on time to stay in good standing and avoid default.

  • Track your progress towards loan forgiveness by confirming your qualifying payment count with your loan servicer.

  • Keep records of all your loan documents and correspondence if you need to reference them.

Challenges

Borrowers with older loans considering the double consolidation strategy may face a unique challenge.

If they do not have enough time to complete the second round of consolidation before the June 30 deadline, they may not receive the full forgiveness credit under the IDR Account Adjustment. Instead, they would get the weighted average of forgiveness credit under the new rules that take effect on July 1.

While loan terms may extend and interest may capitalize because of consolidation, remember that the primary goal if you’re pursuing double consolidation is to lower your monthly payments and work towards loan forgiveness rather than focusing on paying off the loan in full.

End of the Double Consolidation Loophole

The double consolidation loophole is set to close on July 1, 2025, as per the new income-driven repayment plan regulations published in the Federal Register on July 10, 2023.

The U.S. Department of Education has acknowledged that limitations in their data have previously enabled some Parent PLUS borrowers to enroll in IDR plans other than ICR after double consolidation. However, they have clarified that Parent PLUS loans, including those that have been consolidated, are only eligible for ICR.

While the Department will not remove borrowers currently on an IDR plan due to double consolidation, they have added a new provision stating that any Direct Consolidation loan made on or after July 1, 2025, that repaid a Parent PLUS loan or a consolidation loan that included a Parent PLUS loan at any point, will only be eligible for ICR.

If you miss the deadline to complete the double consolidation process before July 1, 2025, you will be limited to ICR for your Parent PLUS loans, which may result in higher monthly payments compared to other IDR plans.

Options for Borrowers Who Don’t Qualify or Miss the Deadline

Most borrowers should be able to qualify for the double consolidation loophole, with a few exceptions. Those who have previously consolidated and are unwilling to return to school to borrow another loan or wait too long to take advantage of the opportunity may not be eligible.

For borrowers who don’t qualify or miss the deadline, there are alternative strategies to consider, such as:

  • Enrolling in other repayment options like the ICR, Extended, or Graduated repayment plans.

  • Making one student loan payment every 90 days to avoid late payments being reported to your credit report and default while acknowledging the limitations of this approach (interest will continue to accrue, and no progress will be made towards loan forgiveness).

Carefully evaluate your circumstances and seek expert guidance to determine the best course of action for your unique situation.

Case Study 1: Lowering Payments from $2k to $0

Susan, an administrative assistant earning $50,000 annually, was overwhelmed by the $2,000 monthly payments demanded by MOHELA for her $200,000 in Parent PLUS loans. Even after exploring options like Extended, Graduated, or Income-Contingent-Repayment plans, Susan struggled to find relief—until she heard about the double consolidation strategy.

Recognizing the complexity of the process and the high stakes involved, Susan hired our team of student loan experts to guide her through the consolidation process. By pursuing double consolidation, we projected that Susan’s monthly payment would drop to $0 for the first year and remain below $100 in the second year—a 20-fold reduction compared to her current payments.

Our team handled the entire consolidation process for Susan, which took 14 weeks from start to finish. The only obstacle we faced was a delay from Aidvantage that required persistent follow-up. By completing the process, we helped Susan secure a manageable path to loan forgiveness and benefit from more credit thanks to the one-time account adjustment.

Despite the uncertainty surrounding future changes to the SAVE plan, our team emphasized that completing the double consolidation process now was the most effective way for Susan to ensure long-term access to affordable monthly payments

Even in the worst-case scenario, Susan would still have access to the ICR plan—a far better outcome than her original situation.

Case Study 2: Enrolling in SAVE With a Previous Consolidation

John, a 50-year-old engineer, had previously consolidated his $400,000 in Parent PLUS loans with MOHELA to simplify his repayment process. But he soon realized that his monthly payments of $4,283 were unsustainable, especially as he approached retirement.

After learning about the double consolidation loophole, John feared he might have missed his chance to benefit from this strategy. He contacted our team of student loan experts to explore his options.

Our team reassured John he could still pursue double consolidation by taking advantage of a unique strategy: going back to school and taking out a small federal loan.

By doing so, John would have a new loan to combine with his previously consolidated Parent PLUS loans, making him eligible for the double consolidation process.

John enrolled at an online college and took out a small federal loan. Our team then guided him through consolidating this new loan with his existing consolidated Parent PLUS loans.

After completing the double consolidation process, John’s monthly payments dropped to $250 under the SAVE plan, giving him much-needed relief and a clearer path to loan forgiveness.

John’s case shows even borrowers who have previously consolidated their Parent PLUS loans can still benefit from the double consolidation loophole with the right guidance and strategy.

Bottom Line

The double consolidation loophole was once a little-known, almost super secret strategy that student loan lawyers like myself used to help parents lower their monthly payments and qualify for loan forgiveness.

As student loan lawyers, we were cautious about promoting the strategy publicly because it wasn’t clear whether the Department of Education officially sanctioned it. But following their announcement last year that they’re not only aware of it but are leaving the door open to all parent borrowers until July 2025, it’s clear that double consolidation is the best strategy for nearly all parents struggling with the student loan debt they borrowed for their children.

Over the past year, my team and I have helped dozens of parents like you navigate the double consolidation process and get enrolled in SAVE. Remarkably, the average student loan payment for our clients who have completed the double consolidation process and enrolled in SAVE is just $157 per month.

Don’t let the complexity of the process or the fear of making a mistake hold you back from taking advantage of this incredible opportunity. With our guidance and support, you can confidently move forward with double consolidation and start enjoying the benefits of lower monthly payments, loan forgiveness eligibility, and a brighter financial future.

Book a 1:1 call with us today.

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FAQs

Is Double Consolidation Illegal?

No, the double consolidation loophole for Parent PLUS loans is not illegal. The U.S. Department of Education has acknowledged its existence and is allowing borrowers to use it until July 1, 2025. After that date, the loophole will close, and Parent PLUS loans that have been consolidated will only be eligible for the Income-Contingent Repayment (ICR) plan.

Can You Unconsolidate Parent PLUS Loans?

No, you cannot unconsolidate Parent PLUS loans. However, if you want to access the double consolidation loophole and SAVE plan, you can enroll in school and take out a new federal student loan. Consolidate the new loan with your existing consolidated Parent PLUS loan to become eligible for the loophole and SAVE plan. Carefully consider this commitment.

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