The DC Department of Insurance, Securities and Banking (DISB) wants residents to be aware of an upcoming deadline to consolidate certain loans in order for borrowers to be eligible for loan cancellation.
Borrowers with commercially held Federal Family Education Loans (FFEL), Parent PLUS loans, Perkins loans, or Health Education Assistance Loans (HEAL) must consolidate their loans into a Direct Consolidation Loan before April 30, 2024, to be eligible for the Income Driven Repayment (IDR) One-Time Payment Adjustment. The IDR program gives many student loan borrowers the opportunity to have their entire student loans cancelled or receive additional credit towards cancellation.
What is the IDR One-Time Payment?
The Department of Education (ED) will be conducting a one-time payment count adjustment giving borrowers credit towards loan cancellation through its IDR Program for repayment periods dating back to July 1, 1994, and for certain deferments and forbearances.
This adjustment will result in loan cancellation after 20 or 25 years of eligible payments. The account adjustment will ensure borrowers receive credit for the maximum number of eligible payments based on their loan history. IDR plans may result in monthly payments that are more affordable because monthly payments are based on the borrowers’ income and family size, not loan balances. However, commercially held FFEL, Parent PLUS, Perkins, and/or HEAL loans are not eligible for these programs unless those loans are consolidated into a Direct Consolidation Loan.
Consolidation allows a borrower to combine one or more federal education loans into a single Direct Consolidation Loan. There is no application fee associated with consolidation. A Direct Consolidation Loan allows the borrower to have a single loan with one monthly bill, lower monthly payments, a fixed interest rate, and access to income-driven repayment plans and other federal forgiveness options such as Public Service Loan Forgiveness (PSLF).
How do I consolidate my loans?
Borrowers must visit studentaid.gov, log in using their FSA ID, and complete the following steps:
- Select the “Loan Repayment” link.
- Next, select the “Consolidate My Loans” link.
- The borrower must select all FFEL, Perkins, HEAL and Parent PLUS loans, along with other loans they wish to consolidate.
- Next, the borrower must choose a student loan servicer, which is the company responsible for collecting payments towards the loan and handling other services on the account. Please note that currently, the only servicer responsible for servicing PSLF is the Missouri Higher Education Loan Authority (commonly known as MOHELA).
- Next, the borrower will need to select a repayment plan. The borrower should carefully read the promissory note and repayment terms before finalizing and submitting their online Direct Loan Consolidation application.
The consolidation process requires approximately 30 minutes to complete.
More Information
If you would like more information on loan consolidation, send an email to DISB at [email protected] or visit DISB.dc.gov/studentloanhelp to view our Student Loan Payment Overview and Curriculum for step-by-step guidance on consolidating loans. You may also call DISB at (202) 727-8000.