Can the Special Direct Consolidation Loan Program Help You?

Special Direct Consolidation Loan Program Update: The application period for this program has now closed (on June 30, 2012). If you’re wondering how long it takes for the special consolidation loans to take effect, you should know that they are not processed immediately. First, your eligibility and loan amounts must be verified by your loan servicer(s). Only then will the consolidation loan be processed. This may take more than a few days. If you want to make a plan for paying off your student loans, use ReadyForZero. And to learn more details about the special direct consolidation loan program, continue reading below… Having trouble paying your student loans? Or just wish you could simplify your loan payments and get a lower interest rate? If so, then you’ll probably be very interested in the new Special Direct Consolidation Loan program initiated by the Obama administration. Below, we’ll describe how the program works – including how you can figure out if you are eligible and whether it’s worth it.

Why Was the Special Direct Consolidation Loan Program Created?

The purpose of the program is to give certain student loan borrowers an opportunity to combine all their student loans so that they can pay one payment each month instead of juggling multiple payments, and so they can count on a fixed interest rate.

Who is Eligible for Special Direct Consolidation Loans?

This part is a bit tricky. First it’s important to understand the holder of a loan is the one who owns it (the one you owe the money to), while the servicer of the loan is the one who is collecting the money from you. Often, the holder and servicer are different entities! Here’s how this works in practice – there are basically three types of loans:

1. Government-held “direct” loans. In this case, you have borrowed money directly from the government but your loan may be serviced by a private company on behalf of the government.

2. Commercially-held loans guaranteed by the government. These loans are made by private companies with private money, but they are guaranteed by the government through the Federal Family Education Loan (FFEL) program. Since they are backed by the government, there is little or no risk to the private company, and that allows the borrower to get more favorable terms on the loan, including lower interest rates. [President Obama recently restructured the FFEL program so that all new loans after June 30, 2010, would be direct loans]

3. Private student loans. Held and serviced by private companies, with no backing from the government.

Those are the three main categories of student loans. (If you’re not sure which type you have, try using the National Student Loan Data System, which allows you to look up all government-held and government-backed loans) In order to be eligible for the Special Direct Consolidation Loan program, you must have:

  • At least one government-held “direct” loan, AND
  • At least one commercially-held loan guaranteed by the government (FFEL)

If you meet those two criteria, then you are eligible for the Special Direct Consolidation Loan program. Keep reading to see how it works…

How Does the Special Direct Consolidation Loan Program work?

Keep in mind, even though you must have a government-held “direct” loan to be eligible, your loan(s) held by the government will not be affected by the program. The program will allow you to consolidate your commercially-held loan(s). Here’s how it works:

  • Each commercially-held loan that you consolidate will retain its original payment terms.
  • That means, if you consolidate more than one loan, each one may have different interest rates and each may have a different end-date.
  • Your interest rate on each loan will be fixed at its current rate (minus 0.25%) and will remain at that interest rate for the life of the loan.
  • You’ll never have to pay an interest rate higher than 8.25% even if you currently do.
  • Once the special consolidation is complete, you will receive one bill each month and will make one payment.

Is There a Fee for Getting a Special Direct Consolidation Loan?

No. Hooray for easy answers! Okay, let’s move on to the most important question…

Is a Special Direct Consolidation Loan a Good Idea?

After all this, is this program worth it for you? That will depend upon your unique individual situation. For many people the answer will be “Yes.” Not only does the Special Consolidation Loan give you the convenience of one payment (instead of multiple payments), but another benefit is it gives you a fixed interest rate that is lower than your current one. Doing the special consolidation will not affect your credit score. And you can still make extra payments to get out of debt faster, if possible. However, as with all financial decisions, there are potential pros and cons, so you should thoroughly research how this would affect your unique individual situation and get advice from several sources before you decide to get a Special Consolidation Loan (see contact information below). We’ve heard from some people who say their total monthly payment is higher after this process, although that is not an intended outcome of the program. [Update: I just talked with a customer service rep at the Department of Education, and she said she's never heard of someone's monthly payments being higher. However, sometimes while the special consolidation loan is processing, it may look like your monthly payments will be higher due to a lag in the database being updated.] One potential downside is that the loans you consolidate will lose their grace period once the special consolidation is completed. If you’re counting on having a grace period, be cautious about applying for a special consolidation loan. According to this article, you might be able to apply with only your loans that have already passed their grace period and then add your other loans later (also see the discussion in the comments section of this blog post).

Do Special Direct Consolidation Loans Work with Income-Based Repayment (IBR)?

Yes! If you are doing Income-Based Repayment (IBR) already, you may continue to do that after getting the special consolidation loan. And any payments you made prior to the consolidation would still be counted toward your total repayment time. In other words, if you had made payments in IBR for the last 2 years, you would have  23 years remaining before your loan balance is forgiven. (Income-Based Repayment allows for loans to be forgiven after 25 years of making payments, regardless of how much remains at that time)

How Do You Apply for a Special Direct Consolidation Loan?

If you are eligible, the U.S. Department of Education will have one of its servicers contact you. These servicers include:

  • FedLoan Servicing (PHEAA)
  • Great Lakes Educational Loan Services, Inc.
  • Nelnet
  • Sallie Mae

These servicers began contacting eligible borrowers on January 17, 2012, and will continue contacting them over the next few months. The window of eligibility ends June 30, 2012. If you think you are eligible and you do not hear from anyone by June, you may want to call your lender and/or the U.S. Department of Education to find out if you are in fact eligible. For questions related to this program, you can call the Department at 1-800-4-FED-AID (1-800-433-3243).

How can I check my special direct consolidation loan application status?

To check the status of your special consolidation loan, you can call the hotline mentioned above, or check in with your servicer to see if the application has been processed. After you submit your application, it may take some time for the servicer to verify your eligibility and the payoff amounts of your loans. Only when that is done will the old loans be paid off and the new servicing begin. In the meantime, you might continue to receive statements and/or bills from your original servicer. As always, if you have any questions, please post a comment below and we’ll do our best to answer it! This article is part of our Student Loan Debt Resource Center and Debt Consolidation Resource Center.  If you’re looking for additional information about student loans or debt consolidation, be sure to pay a visit!

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  • Bizgirl09

    Will you still have the option to request forbearances, etc after the consolidation? Also, what about the monthly payment terms? For instance, if you are experiencing an economic hardship, would you have the option for a lower payment,etc?

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Yes, it is my understanding that you would still have the same options as before (such as forbearance, deferment, etc.), however it’s probably a good idea to double check with your loan servicer to make sure. As for alternative repayment plans for economic hardship, the answer is also “yes.” According to the government’s own website, you can choose from among the following repayment plans: standard, graduated, extended, ICR, or IBR. See this link for more information: http://studentaid.ed.gov/PORTALSWebApp/students/english/specialconsolidation.jsp

  • Stork62786

    I haven’t found a distinct site that mentions it, but do you still get the grace period on your loans if you are just entering repayment?

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      I think I’ve found an answer to your question on the website of MyFedLoan, which is a national servicer of federal loans ( http://www.myfedloan.org/special-consolidation/special-consolidation-faq.shtml ). They say that your grace period will end when the consolidation is complete.

      Here is their full answer:”If your loans are in a grace period, you can apply; however, your grace period will end when the consolidation is complete, and you must then begin making payments on your Special Direct Consolidation Loan.

      If some of your loans are in a grace period and some of your loans are not in a grace period, you may want to consider consolidating the loans that are not in a grace period and then adding the loans that are in a grace period at a later time. You will have 180 days after your Special Direct Consolidation Loan is disbursed to add other eligible loans to the consolidation. You will receive more information about this option when we (or another federal loan servicer) notify you that you are eligible for a Special Direct Consolidation Loan.”

  • Hydrolizeit

    How can I check the status of my application?  Thanks

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      If you have already submitted the application, then you should check with the lender or servicer who you submitted your application to. They should have an 800 number you can call. Let us know if you have any other questions or problems!

  • Gheb

    It is interesting that I recently consolidated my loan under new special direct loan consolidation hopping that the new 0.25% reduction help reduce my monthly payments. However, my new monthly payment exceeds my previous payment. If 0.25% reduction is applied, it does not make sense that my new payment exceeds my old payment. The Great Lake email respondent make short blind response with no clear reason suggesting ‘this is your new payment based on your new interest rate and it is accurate and now you cannot reverse back’. It is like a trap. Please, be aware! This may put you in more debt than you think.

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Wow, that is really strange. We haven’t heard of this happening for anyone else. Is it possible there was a mistake with the processing of your application? Were you enrolled in any Income-Based Repayment or other programs? Or were you still in the grace period for any of your loans? Maybe we can help you figure out what happened and how to fix it. Feel free to respond to this comment or send us an e-mail at support@readyforzero.com.

  • http://twitter.com/KAOrae hoosier_rae

    I applied for this loan in February. I deferred my payments for 3 months until it was either accepted or denied. My next scheduled payment should be in June. I logged on today to check the status of the loan and my account shows “Paid in Full” from a consolidation payment. Is this what it is supposed to say? Maybe it will update in a few days with my new payment due? It says I owe nothing… clearly a mistake!

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Hmm, that is indeed interesting. I would assume that it means your previous loan has been paid by the new consolidation loan, and you will get your new consolidation loan balance very soon. Please come back and let us know in a few days if anything changes. Also, you might want to call the Dept. of Education. For questions about the Special Direct Consolidation Loan Program, you can call 1-800-4-FED-AID (1-800-433-3243).

  • Tc475

    This was really very helpful, thank you.

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      I’m glad to hear that! Thanks for your comment, and please feel free to share this post with anyone else who might find it useful.

  • Kguldenaar

    My application was accepted April 27th but the two loans that I am consolidating still have not been paid off.  Sallie Mae apparently has my loans now and I am scheduled to pay them on June 10th.  I put my two loans that were/are supposed to consolidated in forbearance.  I would really like to know when those loans will be paid off!  As of right now it just looks like I owe an extra $206 to another loan company!  I’ve called a number of times and they keep telling me to just wait.  I’ve been waiting for over a month and I’m starting to really worry!

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Wow, that sounds like an unreasonable delay. We’ve heard some other stories like yours. I hope everything has been resolved. By the way, sorry for the delay in responding to your comment – our commenting system was having problems for awhile that prevented us from being notified of new comments.

  • JAL

    I’m still in college and wont graduate until fall 2013, if i consolidate some of my loans will I have to start making payments or can I still wait until I finish college to make payments?

  • Guest

    Doesn’t seem like it’s completely accurate for IBR: 

    Any payments made prior to the date of consolidation on the loans I am consolidating will not count toward (1) the 25 years of repayment required for loan forgiveness under the IBR Plan or the ICR Plan (see Item 10 of the Borrower’s Rights and Responsibilities Statement in this Note), or (2) the 120 qualifying payments required for Public Service Loan Forgiveness (see Item 17 of the Borrower’s Rights and Responsibilities Statement). 

  • Jon

    My Special Direct Consolidation was processed very recently. It is great having only one payment to make that covers all of my loans, and very nice to have the reduced and fixed interest rates.

    The only thing I did not forsee is that the amount I am paying per month has actually increased slightly. I was excitedly expecting a reduced payment with all loans at one servicer… I was considering using Income Based Repayment before, but now I think I’ll be on IBR for certain.

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Hi Jon, thank you for your comment. We’ve heard from a few people who said their monthly payments have increased. I hope this will be something that is manageable for you. The IBR program sounds like it will be very helpful in this situation. I’m glad you found our blog post helpful!

  • TJ

    Things I’m confused about: does it consolidate all of your privately held loans into one payment, with all of your direct loans still separate? Or does it consolidate all of everything together?

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Your direct loans will not be affected at all. Your commercially-held loans backed by the government will be consolidated, but will retain their original terms. Let us know if you have further questions!

  • Anna

    Hello. I have 4 commercially held student loans that qualify for the special direct consolidation program (these loans are currently in unemployment deferment). My direct loans will remain in a grace period until the end of June. If I consolidate my commercial loans can I set up all of my loans under IBR? 

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      My understanding is that you can consolidate those loans under IBR. However, I realize this response comes too late for you. Our commenting system had a problem that prevented us from being notified of new comments for quite some time – I hope you were able to find the information you needed, though!

  • Anna

    I have four commercially held loans that are in unemployment deferment and qualify for the special direct consolidation program. I also have direct loans that will remain in a grace period till the end of the month. I am very interested in the IBR repayment plan. How would you suggest I proceed. 

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Hi Anna, keep in mind that your direct loans will not be affected by the special consolidation. As for your other question, you can definitely do the IBR program if you get the special consolidation loan. Here is what the Department of Education website says:

      “You can choose any of the following repayment plans to repay your Special Direct Consolidation Loan:
      Standard Repayment Plan
      Graduated Repayment Plan
      Extended Repayment Plan
      Income-Contingent Repayment (ICR) Plan
      Income-Based Repayment (IBR) Plan”

      I’d recommend that you find out how the special consolidation loan will affect your deferment status. You can call the Department of Education hotline at 800-433-3243 for information.

  • Mpenny

    Thank you for your post.  I currently have loans from the DOE serviced by direct-loan servicing.  The loans are separated by type, and I have 3 “categories” of loans that I pay — 2 with 6.8% and 1 with 7.9% interest.  If I bring in a loan serviced by an outside lender under the special direct consolidation, do you know if I will still be able to allocate payments to the different loans?  I would still like to be able to make sure that my higher interest rate loan is getting paid off faster than the others. 

    Thanks!

  • Nikole

    Is it true that once loans are consolidated, that they no longer qualify for deferment options.  Meaning, even if I am still in school I will still have to pay on my consolidation, without benefits of deferment options?  I may not be all clear on options available for current students, who could benefit from not having to pay back while in school.  Thanks for any clarification you can offer.  Great blog btw!

    • Rebecca

      I cannot believe that to be true. When you click on the hyperlinks for the loan repayment options, it mentions “standard is for ten years, except if deferred, etc”

  • Harmony

    Hey, I just graduated and will need the 6 month grace period. Is there a way to accept the Special Direct Consolidation period and still date it for 6 months from now?

    • Rebecca

      No, it has a hard stop for applications June 30, 2012 at 11:59 pm

  • MD

    I just want to make sure that I’m understanding this correctly.  The direct loans will not be affected at all and only my eligible commercially owned student loans will be consolidated.  Meaning, I will essentially have 2 loans if I decide to consolidate: 1 for the direct loans and 1 for the commercially held loans that have been consolidated.  Please let me know if I am missing something.  Thanks!

    • Rebecc

      I just called on this with the exact same question. An actual human being answered and said- NO. It will be combined into one loan, one payment with the previously commercially owned loans having different rates (the rates they came with – 0.25%) At the end of the application, you choose your repayment option- extended, standard, etc. It is kind of like doing the traditional consolidation but getting to add the commercial ones is a bonus. The gov loans will get the weighted average for the interest rate. 

      • Rebecc

        Call 1-800-433-3243 for more info

  • http://www.facebook.com/yanisse.rhodes Yanisse Rhodes

    I applied for the Special direct loan and when the app was done, it said my servicer would be Sallie Mae. I was under the impression that the servicer was going to be Direct Loans. Is there a way to have Direct Loans be the servicer, and NOT Sallie Mae? If I consolidate all but 1 of my loans and they go to Sallie Mae, can I then do a regular Direct Loan Consolidation and pull Sallie Mae loans into direct loans? I had Nelnet prior to the Consolidation.

    • Rebecca

      Sallie Mae is just the servicing agency-not the borrowing folks. Not sure if you can apply for the direct loan consolidation. You can cancel your app when Sallie Mae calls you.

  • http://twitter.com/elizabethtowle Elizabeth Towle

    I had my loans consolidated with the special direct consolidation loan in April 2012. The amounts were wrong by more than $30,000, and Fedloan Servicing hasn’t been able to solve the problem still despite many, many calls. I’ve tried to make my old lender (ACS) and Fedloan talk, but I haven’t gotten anywhere. Any ideas of what can be done about this?

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Hi Elizabeth – I’m sorry to hear that you’re experiencing some problems with the special consolidation process. One thing you should try (if you haven’t already) is to call the Department of Education hotline at 800-433-3243. They should be able to help you figure out what’s going on. Let us know what you hear, and good luck!

      • Terry

        I am having the same problem as Elizabeth with ACS. Nelnet says they’ve consolidated my loans from ACS and have added them to my total. ACS says they have not been paid. As a result when I look at my account with the national st. loan database my total loans owed is $46,000 higher in one month. I will try the number above as well but is there some resource where I can get the complete history of my students loans. Over 25 years of my own, my husband’s and my kids’ loans I’ve lost track with multiple consolidations.
        Thanks,
        Terry

        • http://www.twitter.com/bwfeldman Benjamin Feldman

          Hi Terry, just wanted to check to see if this got resolved? We’ve had a few people mention problems like this and so it would be helpful to hear how your situation turned out. Hopefully they corrected the mistake for you!

          P.S. I’m not sure if there is a site where you can see the history of all your loans, aside from the National Student Loan Database.

          • Terry

            Hi Ben–thanks for checking back. While my problem is resolved, I’m afraid the solution will not be of any help to anyone else—because there really wasn’t a solution. After numerous fruitless phone calls and emailing Nelnet and the federal loan program, I was told that I needed to submit my problem in writing with original loan notes ( yikes! ) I sat down one Sat. to start cranking out requests for copies of the notes when I went into the Nat. st. loan database and saw that the added $46,000 was gone. I printed the screen in case it ever comes back. My guess is that there was a huge lag ( almost 2 months) between how long it took Nelnet to add my consolidation loan to my acct. and ACS removing it and sending an update to the national database. ACS was also terrible about processing my special dir. consol. loan. It took 4 requests and the same number of nagging phone calls from me, over 4 months, to get them to do it. Thanks for providing a place and resource to bring these kind of questions.

            Terry

          • http://www.twitter.com/bwfeldman Benjamin Feldman

            Wow, that is interesting! I’m so glad that the problem was resolved. I think in many cases there seems to be a very long lag time in the removal of the old loan amounts. Now that you’ve shared this experience, others who may be in this situation can take heart and hope their situation is resolved the same way. Thanks again.

  • http://www.facebook.com/peggi.rohner Peggi Rohner

    I did this and my payment DOUBLED!! So not what I was going for….

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Some people have reported that their statements have inaccurate info immediately following the consolidation. So you might want to call and make sure the statement is accurate. You can call the Dept. of Ed. hoteline at 800-433-3243. Also, if it turns out the payment has in fact doubled (which seems very unreasonable) then you should consider applying for Income-Based Repayment. Learn more at our student loan debt resource center: http://www.readyforzero.com/resources/student-loan-debt/

      Please let us know what you find out, as it will help others in the same situation. Thanks!

  • chaz

    I had 2 loans with Great Lakes. I consolidated and now my monthly payment is about $3.00 higher (obviously not substantial, but it adds up over 8 or so years). I called Sallie Mae and they suggested that that my interest rate with Great Lakes was reduced because I was on automatic debit. Still, I’m on automatic debit now, so my interest rates should be .5% less.

    I guess my question is this- could the higher payment be the result of not paying a payment on these loans for one month? If that’s not the case, anyone know why payments are higher?

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      It seems like you should still be able to get the discount for having automatic debit. Plus, you should get an extra .25% for doing the special consolidation loan. I’d recommend calling the Dept. of Education hotline to ask them about this. The number is 800 433 3243.

  • Bill

    I applied back in January when this became available. Nelnet is handling the consolidation. Ever since April I have called every 2 weeks to see if the loan has been processed. Every time I get the same answer that Brazos has not returned the information. Then I call Brazos and they say they did several times. Then I call Nelnet back and they say check back later. It’s hard for me to imagine this should take 7 months to be completed, but it seems there is no way to make the two talk and clear up the concern. Any other reports like this?

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Hi Bill, we’ve heard some pretty concerning anecdotes like this (check out the one above) where the processing seems to take forever. I don’t think there is any reason it should take 7 months. Please keep us updated on any news about how this turns out. And best of luck. Also, sorry for the delay in responding to your comment – we had a problem with our commenting system for awhile.

  • http://www.facebook.com/dorian.vonada Dorian C. Vonada

    I applied for the special direct consolidation loan on June 26th and received emails for the conformation of receipt and of my application and promissory note and informing me that my assigned servicer would be Sallie Mae.

    After a few weeks, I called the Sallie Mae number provided in the second email to find out the status of my consolidation. The Sallie Mae representative went through the usual process of verifying my information (name, social security number, address, etc.) only to tell me that they don’t have any of my records. Why? Because they don’t currently hold any of my loans. When I informed
    them that I was calling because I was informed they would be my servicer for
    this special direct consolidation, I was elevated to a supervisor. The
    supervisor had no more information on me and offered to take down my contact information. She would email the department which handles the
    consolidation and get back to me within 5 business days. I was shocked to
    learn that this is Sallie Mae’s process for handling communication and updates
    regarding these Special Direct consolidations. At this point, I thought it was a good thing that I wasn’t calling to make any changes or updates to my consolidation.

    5 business days later, I received a voice mail from the supervisor I had spoken to at Sallie Mae informing me that payment was sent to AES holder on July 25th. However, a week later my commercial loan holder, American Education
    Services (AES), still had not applied the payment to my account.

    Through a couple of calls to AES, I learned the timeline of events regarding my consolidation: AES received the Lender Verification Certificate (LVC)
    from the Department of Education on June 29th and replied with the requested
    information/completed LVC on July 10th. They received the payment from
    Sallie Mae on July 26th and tried to cash it the same day. After repeated
    inquiries over the next couple of weeks to AES about the status of this
    payment, I additionally learned from AES that Sallie Mae stopped payment on
    July 26th. Sallie Mae responded to an inquiry from AES on August 14th and
    stated that payment had been stopped and that Sallie Mae was no longer the
    servicer for my loan.

    When I learned this, I called Sallie Mae to find out what was going on. Again, a supervisor had to take down my information and tell me that they would get back to me within 5 business days. I called each of the other three servicers to see if one of them was my new servicer. I learned that each of these three has a system in place for customer service representatives to be able to see updates and inform customers on the status of their consolidation. However, none of the three other servicers were my servicer.

    When I called the hotline and any DoE number I could find, I was informed that they can’t actually tell me the status of my Special Direct Loan Consolidation. They can only see that the application was accepted and direct me to contact my servicer. I have not received any notice from the DoE or Sallie Mae informing me of a change to my servicer. As far as I know, Sallie Mae is still my servicer. Although, they haven’t been providing very much service. I have my application, my MPN, a rescinded consolidation payment, and no servicer. I feel as though I have slipped through the cracks.

    Through another last hope call to the hotline above, I spoke with someone who observed that I was at the point of last resorts and gave me a phone number for the DoE ombudsman’s office. I called and summarized my issue with the ombudsman’s office and requested a formal investigation into my
    consolidation. They stated that they were forwarding my case to an ombudsman researcher and will get back to me within 7-10 business days.

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      This sounds like a nightmare scenario – what a shame that these agencies and lenders are doing such a bad job with the processing of your consolidation. It seems like you took all the right steps, including calling the Depart of Education to report your situation. I hope they will resolve this for you. Also, I’m sorry for the delay in responding to you – we had a problem with our commenting system that prevented us from being notified of new comments.

  • C P T

    About 18 months ago I consolidated four spearate private loans using the US Govt consolidation program. I have $219,000 in debt and am paying ~8% interest. Given how low interest rates have been in the past couple of years it seems outrageous to pay ~8%, especially since the resulting payments are at the limit I can afford to pay. I’d like to refinance at a lower rate and make the same payment I am making now so that I can begin to amortize the principal at a faster pace. Is there an option for me to pursue that will accomplish my goal?

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      The Special Direct Consolidation Loan Program is not a good option for you, since the application period has ended. However, you can check out this page: http://studentaid.ed.gov/ to research some other options. And our resource center might help you: http://www.readyforzero.com/resources/student-loan-debt/. It may be hard to consolidate that student loan debt at a rate lower than 8%. But it’s definitely worth looking into! Best of luck.

  • http://www.twitter.com/bwfeldman Benjamin Feldman

    You are absolutely right! I hope whichever decision you made worked out for you.

  • Lindsay

    Not Sure if you will know the answer to this but I did the special consolidation. Well something happened with Direct loans where there was double consolidating. This has been a 8 month headache of trying to get Direct Loans to correct this error. In the middle of working with the Consolidation department they ended up selling my loans to Sallie Mae. (they sold them right when they acknowledged the incorrect consolidation). When going into the NSLDS it is apparent that there is an extra 12k that came out of nowhere. What are my options with this? Direct loans is dragging their feet on this, I’m in the process of trying to buy a house, yet this added debt is working against the amount that can be loaned out to me. This has been 8mo of my life. Is there any way I can pursue legal action to have them clear this up faster? At this point I can’t work with Sallie Mae on this due to the fact that they were sold the loans. This is so stressful, seeing that I never got to benefit from the extra 12k that they are claiming I owe.

  • texman

    So my father passed away 2 years ago. I haven’t heard a word from Direct Loans for over 3 on any loans owed to them. No email, letter, phone calls..etc.

    I decided to do a credit clean up after a nasty divorce and come to find out I have a Direct Loan that is still on there reporting for the past 3 years a delinquent payment 120 days past do. Which of course interest accruing.

    If you didn’t know…. A family member, like my father, had all of our loans in his name and when he passed away 3 years ago all loans were forgiven from the government/ direct loans/ parent plus loans…etc.

    The issues comes with the one loan that has been in forbearance for the last 3 years. YEP! 3 years in forbearance but still reporting that its delinquent.

    I call Direct Loans. Their answer was that this loan was “archived.” Which they still haven’t explained to me at all. I asked what the mistake was on Direct Loans side and they told me they had a system update at that time and “lost” my loan. I asked to have all delinquent credit removed from all 3 credit bureaus and they said yes no problem please give us a week to report this. ( I also faxed and sent a personal letter to them as well which they received)

    After a week I call back…. Nope we cant do that or anything like that and that it will be reporting for the 10 to 7 years on your credit reports. WTF.

    THIS WAS AN INTERNAL MISTAKE and now they are putting the blame on me!

    Any help would be nice I have been fighting this for over the past 4 months.

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Wow, that sounds like a very frustrating situation. I am surprised that they told you two different things when you called two different times. The only thing I can think of is maybe trying to call them back again and see if you can get another person on the line who will help you remove it (like the first person you talked to). I hope you’re able to get it resolved!

  • http://www.coralseamercantile.com.au Coral Mercintile

    Good article about debt consolidation. I think you should first try to repay your debt on your self. Debt consolidation is not a proper way to get out from debt. It will just give you temporary relief. If you want to get out of debt permanently then you have to do it your self.