The Special Direct Consolidation Loan opportunity ended June 30, 2012.
For details on the status of your application, please call 866.426.6765.
The Special Direct Consolidation Loan opportunity was a short-term initiative offered by the U.S. Department of Education; it was available from January 17, 2012, through June 30, 2012. The opportunity was intended to help simplify your education loan payments by ensuring all of your eligible federal education loans would have customer service provided by just one servicing company.
Benefits of getting a
Special Direct Consolidation Loan include:
1.25% interest rate reduction on the loans you consolidate
2.25% interest rate reduction for signing up to make automatic payments
3Having a single loan servicer for all of your eligible federal education loans
How much couldSpecial Direct Consolidation Loans save you?
A penny saved is a penny earned! Individually enter each of your outstanding loan balances, the current interest rates, and the number of payments you have left on your federal education loans to find out how much you could save on interest if you consolidated your eligible federal educations loans with the Special Direct Consolidation Loan opportunity.* If you need to get the details on your loans, please refer to your latest loan statements.Individually enter each of your loans:
Total Savings:Monthly Savings:Calculation is based on a .25% interest rate reduction. Your savings will be double what is shown if you sign up to make automatic payments.* If you choose to consolidate your federal education loans, you will receive an interest rate reduction of .25%. If you choose to sign-up to make automatic payments (ACH), you will receive an additional .25% interest rate reduction.
What is the Special Direct Consolidation Loan opportunity?This was a short-term opportunity was offered by the U.S. Department of Education (the Department), beginning on January 17, 2012, and ending June 30, 2012, for borrowers with at least one student loan with the Department of Education and at least one federal student loan borrowed from a bank or other lender instead of the federal government (a Federal Family Education Loan, or FFEL). The individual loans that are consolidated as a Special Direct Consolidation Loan have customer service provided by just one company called a servicer.
How will I know if I am eligible for a Special Direct Consolidation Loan?Eligible borrowers were contacted by one of the four student loan servicers.
What types of federal education loans can be consolidated with a Special Direct Consolidation Loan?
You must have had at least one federal student loan owned by the Department of Education and at least one federal student loan that you originally borrowed from a company such as a bank, lender, or non-profit organization instead of the federal government (this is called a Federal Family Education Loan [FFEL] Program student loan), and that company must have still owned the loan between January 17, 2012, and June 30, 2012.
Only FFEL loans qualified for this program. These loans include:
- Subsidized and Unsubsidized Federal Stafford Loans (including Nonsubsidized Stafford Loans)
- Federal PLUS Loans for Graduate/Professional Students
- Federal PLUS Loans for Parents
- Subsidized and Unsubsidized Federal Consolidation Loans that were for your loans (spousal consolidation loans were not eligible for this program)
- Guaranteed Student Loans (GSL)
- Federal Insurance Student Loans (FISL)
- Federal Supplemental Loans for Students (SLS)
- Auxiliary Loans to Assist Students (ALAS)
You can verify your existing loan types by logging in to the National Student Loan Data System (NSLDS) at nslds.ed.gov. You’ll need your PIN to access your information. If you don’t have one, you can get one at pin.ed.gov.
Where can I find the details of all my federal education loans?
Get the details on your loans by referring to your latest loan statements.
Why would Special Direct Consolidation benefit me?Special Direct Consolidation was intended to help you simplify your student loan payments by ensuring the customer service for all of your eligible federal education loans comes from the same organization. Also, if your loans became a Special Direct Consolidation Loan, you received a 0.25% interest rate reduction on the current interest rate for your FFEL loan(s) as of the date that your loans become a Special Direct Consolidation Loan. The interest rate will be fixed for the life of the loan and cannot exceed 8.25%. You will receive an additional 0.25% interest rate reduction on all of your loans for signing up to make automatic payments.
How much money will I save by participating in the Special Direct Consolidation Loan opportunity?Your interest savings will vary depending on your individual FFEL loan amount, repayment plan, and remaining term. On each FFEL loan that became part of the program, the interest rate will be reduced by 0.25%. You'll also receive an additional 0.25% interest rate reduction on all of your student loans by signing up to make automatic payments.
For example, a borrower about to enter repayment with two $4,500 FFEL Stafford loans (with a 6.0% interest rate) under a Standard Repayment Plan (10 years of repayment) can expect to pay a total of $2,990 in interest if he or she makes the payments over the full repayment plan term as scheduled. If the borrower participates in this program, the individual would save $269 in interest payments over the life of the loan assuming ACH sign-up.
How are Special Direct Consolidation Loans different than traditional Direct Consolidation Loans?
Traditional Direct Consolidation Loan
Special Direct Consolidation Loans
Number of Payments
One payment made monthly toward your consolidation loan, which combined all of your eligible federal loans into one loan that has one servicer.
A single payment for all eligible loans.
The repayment term for the loan starts over, giving students more time to repay their loan. A longer repayment term may result in lower monthly payments but will ultimately increase the amount the borrower will pay over the life of the loan since more interest will accrue during a longer repayment period.
Each loan retains its original repayment term. As a result, borrowers will pay less interest over the life of the loan than they would under the traditional consolidation program.
A fixed rate (not to exceed 8.25%) based on the weighted average of the interest rates of those loans being consolidated, rounded up to the nearest one-eighth of 1%.
A fixed rate (not to exceed 8.25%) after applying the 0.25% interest rate reduction to the FFEL loans in the program.
Electronic Debit Benefit
Eligible for a 0.25% interest rate reduction if the loan is repaid through the Department's automatic debit system.
Eligible for a 0.25% interest rate reduction if the loan is repaid through the Department’s automatic debit system.
How long does the application approval process take?After you apply for the Special Direct Consolidation Loan opportunity, expect the consolidation process to take approximately 45–75 business days to finish.
Do I continue to make student loan payments while my application is being processed?Yes, continue to make your scheduled payments with each servicer until notified to start making payments on your Special Direct Consolidation Loan instead.
Which repayment plans are available for my Special Direct Consolidation Loan?You can choose any of the following repayment plans to repay your Special Direct Consolidation Loan:
- Standard Repayment Plan
- Extended Repayment Plan
- Graduated Repayment Plan
- Income-Contingent Repayment (ICR) Plan
- Income-Based Repayment (IBR) Plan
If your Special Direct Consolidation Loan includes parent Federal PLUS Loans or Federal Consolidation Loans that repaid parent PLUS loans, that portion of your consolidation loan may not be repaid under the IBR Plan. You have the option of paying that portion of your loan under the ICR Plan. For more information about each repayment plan, visit Repayment Plans and Calculators.
Will my repayment term change?
The repayment term (the length of time you have to repay your loans) will not change for each of your FFEL loans that became part of the Special Direct Consolidation Loan. Once the loans are consolidated with this opportunity, the repayment term will not start over, whether you select the same or a different repayment plan. This means, for example, that if you had made three years of loan payments on a 10-year Standard Repayment Plan for a Federal Stafford Loan and you choose the Standard Repayment Plan for your Special Direct Consolidation Loan, your remaining repayment term would continue to be seven years for that Stafford loan.
As a result, you will likely pay less interest over the life of the loan than you would with a traditional Direct Consolidation Loan because a traditional consolidation loan starts your repayment term over, and potentially extends it over a longer period of time, which would cost you more in interest.
If you change your repayment plan in the future, your repayment term could change to correlate with the new plan.
Will I receive credit for previous Income-Based Repayment (IBR) payments?
Yes, if you made any IBR loan payments on your FFEL loans prior to consolidating your loans with this opportunity, those payments will count toward the required repayment time for cancellation if you remain in IBR. Under current IBR regulations, any remaining loan balance is forgiven after 25 years of repayment.
After I consolidate my FFEL loan(s), when will my next loan payment be due?The monthly payment due date for your consolidated FFEL loan(s) will be at least 30 days, and no more than 60 days, past the date that your Special Direct Consolidation Loan is finalized. You'll receive a letter from your servicer that contains your specific loan details, along with your Schedule of Repayment Disclosure and monthly statements either electronically or through the mail—whichever method you've already elected for your Direct Loan(s)..
Who provides customer service for the Special Direct Consolidation Loan opportunity?Your former servicer for your Department of Education student loans will provide customer service for your Special Direct Consolidation Loan.
Am I required to sign new promissory notes to obtain a Special Direct Consolidation Loan?Yes, by participating in the Special Direct Consolidation Loan opportunity, you technically took out a new loan, requiring a new promissory note be signed.
Will my FFEL loans be eligible for loan forgiveness under the Public Service Loan Forgiveness (PSLF) Program?By consolidating your FFEL loans into a Special Direct Consolidation Loan, those loans become Direct Loans and, as a result, are eligible for the PSLF Program if you meet the additional program requirements. Under the forgiveness program, you may qualify for forgiveness of the remaining balance due on your eligible Direct Loans after you have made 120 payments on those loans under certain repayment plans while employed full time by certain public service organizations.
We're Nelnet, a student loan servicer for the U.S. Department of Education (Department). On behalf of the Department, we're here to make sure you have the best student loan experience possible. Basically, we're the folks who provide student loan customer service—answer questions, discuss repayment plan options when the time comes, and process payments. We look forward to helping you in any way we can.
As a student loan servicer for the U.S. Department of Education, we're promoting and servicing the Special Direct Consolidation Loan Opportunity on their behalf.