Income-Based Repayment: Eligible Loans

Make sure you have taken the right steps to ensure your loans qualify!

This is an important step to consider now -- when you are borrowing or considering consolidating loans.

 

Federal Loans or Private Loans?

If you want to qualify for the federal programs you'll want to make sure you are taking out federal loans and avoiding private or commercial loans if possible because private loans are never eligible for government forgiveness.  If you borrow all or mostly federal loans, you have preserved the possibility of all or most of your loans being eligible for Income-Based Repayment and Public Service Loan Forgiveness.  The more you borrow in private or commercial loans, the more you foreclose this possibility.

 

What are FFEL and Federal Direct?

Most students borrow federal student loans (like Stafford loans and GradPLUS loans).  These loans may have originated 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 were issued by private banks and lending institutions like Sallie Mae, but are still federal student loans because they are guaranteed by the government.  Federal Direct loans are federal student loans issued directly by the United States Department of Education.  Although Congress discontinued the FFEL program in 2010, you may have FFEL loans that were taken out earlier. 

When you graduate, you may consolidate your federal student loans into a Federal Consolidation Loan in order to reduce your payment amounts and repay on an extended schedule.  Federal Consolidation Loans may be obtained from FFEL lenders and from Federal Direct, and students may choose either program. 

• How do I know what types of loans I have?

 

Federal Direct and FFEL loans are eligible for Income-Based Repayment.

This includes Stafford loans, Grad PLUS loans and Federal Consolidation loans.

Parent PLUS loans are not eligible, nor are consolidation loans including Parent PLUS loans.  If you intend on utilizing IBR, avoid including Parent PLUS loans in your consolidation loan.

Some students also borrow commercial loans from state or private lenders, and it is important to note that commercial loans are never eligible for IBR or for PSLF.  This is because the government does not own this debt and the government cannot relieve or forgive what it does not own.  Students that went to school before 2006 are more likely to have a substantial amount of commercial student loan debt because the GradPLUS loan only became available in 2006.

 

Note: Only Federal Direct (not FFEL) loans are eligible for Public Service Loan Forgiveness.

If you intend to enroll in IBR and work toward PSLF, you may consolidate your federal loans into the Federal Direct loan program. 

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 College Cost Reduction and Access Act creating the right to reconsolidate took effect July 1, 2008.

• How do I consolidate into Federal Direct?

You may get your federal loans into the Federal Direct Loan Service by consolidating:

• Use the online Federal Direct Consolidation Loan application available at the Department of Education’s website: http://loanconsolidation.ed.gov/ [5]
• Direct Loan Consolidation Self-Help Packet [6]

 

To Find Out What Types of Student Loans You Have:

• Request a Personal Identification Number (PIN) from the Department of Education: www.pin.ed.gov [7]
• Use the PIN to look up your loans in the National Student Loan Data System: www.nslds.ed.gov [8]

Check for commercial student at www.annualcreditreport.com [9].  Commercial loans will not appear in the National Student Loan Data System and are not eligible for federal forgiveness.