This is a short-term opportunity 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 (this is called a Federal Family Education Loan (FFEL). The individual loans that are consolidated as a Special Direct Consolidation Loan will have customer service provided by just one company called a servicer.

Eligible borrowers should wait to be contacted by one of the four servicers, or call 866.426.6765 for assistance.

You must have 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, and that company must still own the loan (this is called a Federal Family Education Loan [FFEL] Program student loan).

Only the FFEL loans qualify 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 are 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.

Get the details on your loans by referring to your latest loan statements.

Special Direct Consolidation is 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 become a Special Direct Consolidation Loan, you will receive 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.

Your interest savings will vary depending on your individual FFEL loan amount, repayment plan, and remaining term. On each FFEL loan that becomes 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 they make the payments over the full repayment plan term as scheduled. If this borrower participates in this program, they would save $269 in interest payments over the life of the loan assuming they signed up for ACH.

It's your choice. Please assess your personal student loan situation to determine if the Special Direct Consolidation Loan opportunity is the best option for you. While a Special Direct Consolidation Loan offers certain benefits, you may prefer to continue paying as you have been, especially if you have unearned borrower benefits (you can verify this with your servicer), or you may wish to consolidate all of your federal loans (including loans that are ineligible for this special consolidation opportunity) into a traditional Direct Consolidation Loan.

	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.
Repayment Term	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.
Interest Rate	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.

The process is simple. Read about the six steps to apply for the Special Direct Consolidation Loan opportunity on our website.

You will need to apply directly with the Department of Education. One of the Department's four federal loan servicers will contact potentially eligible borrowers. If you have been contacted by Nelnet, Sallie Mae, Great Lakes, or FedLoan Servicing (PHEAA), sign in to StudentLoans.gov and look for an alert about the Special Direct Consolidation Loan opportunity. Make sure you have the following information available to help expedite the process:

1. Federal education loan records.
2. Bank account statements
3. Bills
4. Personal information (address and phone number) for two references. (You must list two individuals with different U.S. addresses who do not live with you, and who do not live with each other, who have known you for at least three years.)

If you have not yet been contacted by one of the four federal loan servicers, please wait for the servicer's communication and instructions.

After you apply for the Special Direct Consolidation Loan opportunity, it usually takes approximately 30-60 business days to finish the consolidation process.

Yes, continue making your scheduled payments with each servicer until notified to start making payments on your Special Direct Consolidation Loan instead.

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.

The repayment term (the length of time you have to repay your loans) will not change for each of your FFEL loans that become 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 you put your Special Direct Consolidation Loan on.

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.

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).

Your current servicer for your Department of Education student loans will provide customer service for your Special Direct Consolidation Loan.

Yes, by participating in the Special Direct Consolidation Loan opportunity, you are technically taking out a new loan, requiring a new promissory note be signed.

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.

If you have additional questions about the Special Direct Loan Consolidation opportunity, visit www.studentaid.ed.gov/specialconsolidation.