Consolidating Your Federal Student Loans in 2012 – The Available Options

None of your student loans can be included in bankruptcy. So, if you have student loans, it is in your best interest to pay those off. However, if you have both private and federal student loan at the same time, it won’t be possible to consolidate both the types in a same consolidation program. The two different forms of student loans are required to be consolidated in two different debt consolidation programs. Another very important thing to keep in mind with regards to the student loans is that though private student loans come under the Statute of Limitations or SOL, it is not applicable for the federal student loans. 

Consolidating the federal student loans

There are various options through which you may be able to consolidate the federal student loans. Try evaluating the options that you have with regards to debt consolidation on the federal student loans. With debt consolidation, all of the debts that you have are combined together and the interest rate gets lowered. This eases the debt pressure a lot. So, what are the consolidation options with regards to your federal debts?

There are the Traditional Direct consolidation loans and the Special Direct loan consolidation loans through which you may be able to pay off the federal student loans. The Direct Consolidation Loan option provides the borrowers with the option to consolidate the federal student loans as a single loan. These two options are being offered by the U.S. Department of Education from January through June 2012.

In case of the Special Direct Consolidation Loans, the borrowers who have loans as per the descriptions below will find themselves eligible to get their student loans consolidated through this option. The students need to have:

• At least one loan through the Department (this can be a Direct Loan or a Federal Family Education Loan or FFEL held by the Department and which was serviced by a servicer of the Department); and
• At least one commercially-held FFEL loan (FFEL loans which are owned by a FFEL lender and have been serviced either by the same lender or have been serviced by a servicer who have especially been contracted by the same lender).

The consolidation options which are eligible for the Special Direct Consolidation Loan program are the FFEL Subsidized and Unsubsidized Stafford Loans, the FFEL PLUS Loans (the ones taken out by both the graduate or professional students and the ones taken out by the parents to pay for the expenses of the undergraduate student) and the FFEL Consolidation Loans.

Now, in order to be eligible for this special consolidation program, the loans will also have to be in the grace period, or in repayment or deferment or forbearance. The Perkins loans, private student loans Health Education Assistance Loans (HEAL), Health Professions Student Loans (HPSL), Nursing Student Loans (NSL), Loans for Disadvantaged Students (LDS) are not eligible to get consolidated under this program.