Administrative Forbearance for Borrowers Experiencing Hardship in Consolidating Loans into the U. S. Department of Education's Direct Consolidation Loan Program

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The U.S. Department of Education is experiencing temporary processing delays for applicants for Federal Direct Consolidation Loans. The Department is sending to those who inquire and to borrowers who submit an application after September 1, 1997 a letter explaining the current status of USDE processing and offering them possible alternatives to Direct Loan consolidation. One of these alternatives is for borrowers to request an FFELP consolidation loan by contacting one of their FFELP loan holders. The letter includes a fact sheet that describes the differences between the Direct Loan and FFELP consolidation programs. The Department has requested that the FFELP program assist these borrowers who contact us regarding the possibility of consolidating their loans into the FFEL program.

The Department has authorized FFELP lenders to grant an administrative forbearance to borrowers who contact them, in writing, by phone, or in person, and state that they are experiencing a hardship because they are waiting, but unable, to consolidate their loan/s into the Federal Direct Consolidation Loan program. For delinquent borrowers, the forbearance can be granted retroactive to the beginning of the delinquency period. The end date of this specific forbearance is the date the loan is consolidated. The borrower’s written or phone request, noted by the lender in the borrower’s file or record, will serve as sufficient documentation for granting the administrative forbearance.