Loans that are not eligible for consolidation include state or private loans that are not federally guaranteed.Although all of these different loans may be consolidated, you must have at least one outstanding FFEL or Direct Loan to obtain a Direct Consolidation Loan.
The good news is that the Department explains on its web site that if any loan you want to consolidate is still in the grace period, you can delay entering repayment on your new Direct Consolidation Loan until closer to your grace period end date.
You can indicate this when you apply, and the consolidation servicer will wait to process your application until the appropriate time.
Another common problem is that partial discharge of a joint consolidation loan under any of the discharge programs (other than death discharge) does not eliminate joint liability for the remaining balance.
Further, borrowers with joint FFEL consolidation loans, according to the Department, may not reconsolidate into Direct Loans and therefore are not eligible for public service loan forgiveness. The fixed rate is based on the weighted average of the interest rates on the loans at the time of consolidation, rounded up to the nearest one-eighth of a percentage point.
Both spouses are jointly liable for the loan and both must request IBR.
Problems often arise if the ex-spouses are no longer in contact.
Using Studentloans.gov: You will need to sign in using your personal identifiers and PIN. You have four different “consolidation servicers”: Fed Loan Servicing (PHEAA), Great Lakes, Nelnet and Sallie Mae (now called Navient). (“Joint and several liability” means that both borrowers are fully liable for the full amount of the debt). Not surprisingly, this caused a lot of problems for borrowers and Congress eliminated the program as of July 1, 2006.
The electronic application consists of five steps: 1. If may make this choice on-line or if you are sending in a paper application, you should send directly to the servicer you choose. The Department provides some general information about servicer performance in the on-line data center and quarterly performance reports. There are still many borrowers struggling with joint consolidation loans.
These include deferment, forbearance, cancellation, and affordable repayment rights.