COLLEGE COST REDUCTION AND ACCESS ACT
ELIGIBLE LOANS
Those in government and nonprofit service can choose to consolidate their
student loans into the Federal Direct loan program. Remember, only Federal
Direct loans are eligible for Public Service Loan Forgiveness.
Most students borrow federal student loans (like Stafford loans and
GradPLUS loans). Students borrow these federal student loans from one of
two major federal student loan programs: the Federal Family Education Loan
(FFEL) program or the Federal Direct loan program. Federal student loans
from the FFEL program are issued by private banks and lending institutions
like Sallie Mae, but are still federal student loans. Federal Direct loans are
federal student loans issued directly by the United States Department of
Education. Students do not choose whether they get their federal student
loans from a FFEL lender or from Federal Direct; schools participate in one or
the other program.
Eligible Loans
When students graduate, many consolidate their federal student loans into a
Federal Consolidation Loan in order to reduce and extend the payments.
Federal Consolidation Loans may be available from private lenders and are
available from Federal Direct. Only Federal Direct Loans (including Stafford
loans, GradPLUS loans and consolidation loans) are eligible for Public
Service Loan Forgiveness.
Borrowers that have already consolidated eligible federal student loans into a
FFEL Federal Consolidation Loan have the right to reconsolidate into a
Federal Direct Consolidation Loan. The provision of the CCRAA creating the
right to reconsolidate took effect July 1, 2008.
Ineligible Loans
Parent PLUS loans are not eligible and consolidation loans including Parent PLUS loans are
not eligible. Borrowers are cautioned that consolidating Parent PLUS loans with loans eligible
for Public Service Loan Forgiveness should be avoided.
Some students also borrow commercial loans from state or private lenders, and it is important
to note that c