If you have FFEL (Family Federal Education Loans) or Parent PLUS loans (loans that you took out for your child) you will need to consolidate these loans to be eligible for PSLF and Income Driven Repayment plans.
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Why do I need to consolidate?
- If you have FFEL or Parent PLUS loans, you may be required to consolidate your loans into Direct Consolidation Loans in order to be eligible for an Income Driven Repayment (IDR) Plan
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What types of loans are not eligible for PSLF (do need to be consolidated)?
- Federal Family Education Loans (FFEL), Direct Parent PLUS Loans and Perkins Loans are not eligible to be forgiven under the PSLF program. Consolidating converts your ineligible loan types to the eligible type for PSLF and IDR plans.
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What types of loans are eligible for PSLF (do not need to be consolidated)?
- The only loan types eligible for the Public Service Loan Forgiveness program are Direct Unsubsidized/Subsidized Loans, Direct Consolidation Loans and Direct Graduate PLUS Loans. (Direct Parent PLUS loans must be consolidated.)
- You do not need to consolidate any eligible loans you already have. This is because under the PSLF program, you must make 10 years of payments on an Income Driven Repayment plan. Any previous qualifying forgiveness payments will become a weighted average once you consolidate which could potentially lower your eligible payment count. You can read more about weighted averages here https://bysavi.zendesk.com/hc/en-us/articles/31467536459027-Consolidation-and-It-s-Effects-on-PSLF-and-IDR-Forgiveness-Progress
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Where do I consolidate my loans?
- Student loan consolidation must be consolidated through the Federal Student Aid website at https://studentaid.gov/
- You can follow our step by step guide here: https://bysavi.zendesk.com/hc/en-us/articles/24061341514515-How-Do-I-Consolidate-My-Loans
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What’s the difference between refinancing and consolidation?
- Consolidation bundles multiple federal loans into a new federal loan. Allowing you to make a single payment or qualify for certain repayment programs
- Refinancing replaces one or more existing federal OR private loans with a new private loan, likely at a lower interest rate
- Consolidation for the purpose of PSLF eligibility does not change the balance of the loans and in most cases, will not change the interest rate either.
- For more details on the pros and cons of consolidation please read this article: https://bysavi.zendesk.com/hc/en-us/articles/17275343614995-Pros-and-Cons-of-Consolidation
Back on your dashboard, you’ll have the option to confirm that you started the consolidation process.
After your consolidation is processed, you’ll be able to confirm this on your dashboard and will be rerouted back to the loan sync. You’ll be able to add your new consolidation loan and enroll in one of the plans on the results page.