Special Federal Direct Stafford Loan Consolidation
On October 25, 2011, the Obama Administration announced several steps it is taking to increase college affordability by making it easier to manage student loan debt. One key initiative includes a short-term consolidation opportunity that will be offered through the Department of Education from January – June 30, 2012.
To be eligible for the special Federal Direct Stafford Loan Consolidation opportunity, the borrower must meet both of the following criteria:
The borrower must have at least one Federal Direct Stafford Loan or ED-held (also referred to as Department-held) Federal Family Education Loan (FFEL) Program loan to be eligible for a Special Direct Consolidation Loan.
The borrower must have at least one commercially-held Federal Family Education Loan (FFEL) loan that meets the requirements outlined in the high-level summary.
There are four lenders that are in the process of contacting eligible borrowers:
- FedLoan Servicing (PHEAA),
- Great Lakes Educational Loan Services, Inc.,
- Nelnet, and
- Sallie Mae
The lenders listed above will communicate with eligible borrowers through mail and/or email correspondence and notify them on how they can apply for this special offer. You should not apply for this offer until you are called.
After a potentially eligible borrower has been contacted by one of the lenders listed above, that servicer will become the borrower’s primary point of contact for questions and information related to the Special Direct Consolidation Loan opportunity. Each communication the borrower receives from the lender will include the servicer’s contact information.
The correspondence from the servicer will explain the steps a potentially eligible borrower must complete to apply for a Special Direct Consolidation Loan. In addition, the servicer will provide the URL for the borrower to use to access and complete the online application.
Cancellation of Traditional Federal Direct Stafford Loan Consolidation Loan Applications
If you are eligible for the Special Direct Loan Consolidation and have been contacted by a lender but have a traditional Direct Consolidation Loan application in process, you may be able to cancel the traditional consolidation application.
The guidelines that apply to canceling a traditional Direct Consolidation Loan application are summarized as follows: