FFEL Plus Graduate Loan Consolidation to qualify for Pay as you Earn

[toothmcgooth]

Hi guys. So I have a few loans from 2010 that are FFEL Plus Grad loans. The rest are direct loans. I will be graduating May 2015 and will have to start repayment by June 21, 2015. As of now I only qualify for IBR because of the eligibility rules with PAYE. Hoping by Dec 2015 I can qualify for PAYE. Under the student loan government website, it states that FFEL Plus Graduate Loans do not qualify for PAYE but for IBR.

My question is, will those few FFEL Plus Graduate loans disqualify me from PAYE? Or will it be a situation where I end up doing IBR for the FFEL Plus loans and PAYE for the rest of my direct loans.

I called Navient/Sallie Mae and studentloans.gov but they both didn't seem to have concrete knowledge about this tissue. One of the Navient representatives told me that if I consolidated my FFEL Plus Grad loans I would then only be able to use IBR and not PAYE. I felt that this was incorrect.

If anyone has any information regarding this can you please advise? Thanks SDN!

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[RangerBob]

I consolidated my FFELP loans (from my first year of medical school--all the others were direct after that) into a direct loan, but not to qualify for PSLF (I didn't qualify because I took out one loan back in 2006 and I still had it at whatever arbitrary date the government set). I consolidated so that in the rare instance PSLF sticks around then those loans could get forgiven as well.

I'm not sure why you're being told that consolidating means you can't do PAYE anymore. Your loans have to be direct loans to qualify for PAYE, so I don't see why getting a direct consolidation loan would disqualify you. As far as I know you can't be in two different repayment programs at the same time (PAYE and IBR), but your servicer should be able to answer that question. Unfortunately as you found out, loan servicer customer service reps often don't know what they're talking about...

 

[SigmaFS]

Hi guys. So I have a few loans from 2010 that are FFEL Plus Grad loans. The rest are direct loans. I will be graduating May 2015 and will have to start repayment by June 21, 2015. As of now I only qualify for IBR because of the eligibility rules with PAYE. Hoping by Dec 2015 I can qualify for PAYE. Under the student loan government website, it states that FFEL Plus Graduate Loans do not qualify for PAYE but for IBR.

My question is, will those few FFEL Plus Graduate loans disqualify me from PAYE? Or will it be a situation where I end up doing IBR for the FFEL Plus loans and PAYE for the rest of my direct loans.

I called Navient/Sallie Mae and studentloans.gov but they both didn't seem to have concrete knowledge about this tissue. One of the Navient representatives told me that if I consolidated my FFEL Plus Grad loans I would then only be able to use IBR and not PAYE. I felt that this was incorrect.

If anyone has any information regarding this can you please advise? Thanks SDN!

OP - This can be easily addressed. The issue is only direct loans are eligible of PAYE. To address this, complete a Direct Loan Consolidation application (at www.studentloans.gov) to convert your FFEL Grad Plus loans to a Direct Consolidation loan. You might also consider consolidating all your federal loans during this process. And, within the application process, you'll be asked to choose a repayment plan - select PAYE. Finally, you'll asked to select a loan servicer and given your experience with Navient....maybe consider Great Lakes (no affiliation with any loan servicer).

Good luck!

 

[toothmcgooth]

Hey thanks for the info! Yeah I was so surprised they didn't seem sure about the facts.

So as of now I don't qualify for PAYE because I had some loans prior to 2007. However hoping that the PAYE expansion (executive order by Obama) in Dec. 2015 will allow me to be eligible for PAYE as it extend to all borrowers.

So I graduate in May. Consolidate FFELP loans into Direct Consolidation Loan. Sign up for IBR until 12/2015, when PAYE eligibility takes effect 12/2015, apply for PAYE. Sound like a good plan?

 

[SigmaFS]

The Feds contract with the loan servicers based on bids. The low ball bidder wins the contract resulting in poor service.

Your plan is spot-on. I will add this...the final details of PAYE expansion have not released. Not only are they going to expand PAYE to all federal loan borrowers, but they may expand eligible loan types to include both Direct and FELP loans. I suggest this because current FELP loan owners (i.e. Sallie Mae, Nelnet, Great Lakes) don't want to loose the portfolio via Direct Consolidation. I am sure they're back channeling congress members to include FELP as a PAYE eligible loan type. May not be a concern for you, but just speculation on my part.