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Questions about my FFELP consolidation loan

Started by futureman, September 12, 2022, 12:50:16 pm

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futureman

I have been reading all the articles regarding the recent actions taken by the Department of Education regarding loan forgiveness, changes to the Income-Based Repayment (IBR) plans, etc. and I have some questions that I haven't been able to find clear answers to about my own situation.

My wife and I each took out both subsidized and unsubsidized Stafford Loans for graduate school. The loans went into repayment in 2005, soon after which we consolidated all of our loans together into a single consolidation loan where we are co-borrowers as spouses. The consolidation loan is an FFELP loan owned by a private bank. We have made the required payments on the loan since it went into repayment (other than some short periods where they were put into automatic deferment for things like hurricane relief programs).

The remaining balance on the consolidation loan is approximately $47K and we are scheduled to have 13 more years of payments. The interest rate on the loans is 1.625% (after a 1% reduction for making the first 36 payments on time and a 0.25% reduction for automatic payments through direct debit).

My understanding is that FFELP loans are not eligible for the $10K in loan forgiveness, though I have seen some mention of the DOE potentially applying the loan forgiveness to FFELP loans at some point in the future.

My main questions surround some of the actions the DOE has taken with respect to IBR plans. Our loans are currently not under an IBR plan. The payment amount was originally set on a straight 30-year amortization schedule and has remained that way for the last 17 years.  I have read that the DOE will be doing a one-time credit for FEDERALLY held loans towards the 20 year (or 25 year) IBR forgiveness, regardless of whether or not you have been paying under an IBR plan.  But in order to qualify for this one-time credit, you must have a FEDERALLY held loan, not a FFELP loan.

Questions:

1. Can we re-consolidate our loans as a Direct consolidation loan even though it is already a FFELP consolidation loan? We do not have any additional loans to add to the consolidation.
2. Would we lose the rate reductions our current private lender is affording us?
3. Would the rate of our new consolidation loan be the same as our current loan (aside from the aforementioned rate reductions)?
4. Would we get IBR credit for all the payments we have made during the last 17 years?
5. What determines whether you are eligible for IBR forgiveness after 20 years as opposed to 25 years?
6. If we are able to re-consolidate, I would think we would need to be under an IBR plan going forward to qualify for IBR forgiveness after we hit the 20 year (or 25 year) mark. Would the timing of the reconsolidation have an impact on the monthly payment amount under our IBR plan? Our income substantially decreased in 2022 as compared to 2021 and ideally the IBR payment amount would be based on our 2022 income.



TheCollegeInvestor

Sadly, you appear to have a Spousal Consolidation Loan. There are only about 1,000 borrowers left with these, and they are consistently left out of all programs and features.

You can get IBR with these loans, but its unlikely to get past credit under the waiver.

The best bet is to contact your congressperson and asks them to support Elizabeth Warren's bill that would allow these loans to be separated and then you can each do as you want - consolidate, change repayment plans on each of your loans, etc.