What if I only have one Parent PLUS Loan (and no other federal loans)?
In this scenario, by consolidating your Parent PLUS Loan, you will get access to the Income-Contingent Repayment (ICR) plan.
- ICR is one of the more expensive Income-Driven Repayment plans but can significantly lower payments for borrowers with low incomes and/or small loan balances.
- ICR payments will qualify toward Income-Driven Repayment forgiveness and Public Service Loan Forgiveness.
What if I have at least one Parent PLUS Loan and at least one other federal loan?
If you have at least one Parent PLUS Loan and at least one other federal loan (of any type, including another Parent PLUS loan), you can use a double consolidation loophole to get access to the new more affordable SAVE plan.
- While the double consolidation process is time consuming, it’s often worth it, as SAVE payments are typically much lower than ICR payments.
- You must complete all the necessary consolidations by July 1, 2025 to access SAVE.
- SAVE payments will qualify toward Income-Driven Repayment forgiveness and Public Service Loan Forgiveness.
How to Use the Double Consolidation Loophole:
The key to using the double consolidation loophole is to consolidate each of your Parent PLUS Loans twice.
Scenario 1: Two or More Parent PLUS Loans
In this scenario, a borrower can have as few as two Parent PLUS Loans. By consolidating the Parent PLUS Loans into two separate Direct Consolidation Loans, and then consolidating the two Direct Consolidation Loans together, the final Direct Consolidation Loan will be eligible for the SAVE plan.
For example, if a borrower has two Parent PLUS Loans, each Parent PLUS Loan will need to be consolidated by itself, then the two resulting Consolidation Loans will need to be consolidated a final time together:
Steps for this Example:
Step 1: Fill out a consolidation application online on studentaid.gov for just one Parent PLUS Loan. Pick Nelnet for the servicer. Download a copy of your application to help you with Step 2. It will contain account numbers, balance information, loan type codes, and servicer names needed for your next application.
Step 2: Fill out a paper consolidation application for the second Parent PLUS Loan.
- On page two of the application, identify the loans that you want to include in the consolidation. Fill in information about the Parent PLUS Loan that you excluded from the consolidation application you completed on studentaid.gov.
- On page three of the paper application, identify the loans you want to exclude from the consolidation. Fill in information about the Parent PLUS Loan that you included in the application you completed on studentaid.gov.
- Send the completed paper application to Aidvantage.
Step 3: After you have received notice from both Nelnet and Aidvantage that your two new Direct Consolidation Loans have been funded, fill out a final paper consolidation application.
- On page two, list both Direct Consolidation Loans to include them in the consolidation. You will not have any loans to exclude from this application. You can choose any servicer and send the application to that servicer.
- You can send the application to the servicer of your choice, but if you’re pursuing PSLF, send it to MOHELA.
Step 4: After receiving notice that your final Direct Consolidation Loan is funded, fill out a paper Income-Driven Repayment (IDR) Plan Request, choosing the SAVE plan, and mail it to your new servicer. You may be able to upload the completed application through your servicer’s website.
Scenario 2: Parent PLUS Loan(s) and Any Other Federal Loan
In this scenario, a borrower can have one or more Parent PLUS Loans and one or more of any other type of federal loan. By first consolidating the Parent PLUS Loan(s), then consolidating all the loans together, the final Direct Consolidation Loan will be eligible for the SAVE plan.
For example, if a borrower has two Parent PLUS Loans and a Consolidation Loan, the Parent PLUS Loans first need to be consolidated together. The resulting consolidation will then need to be consolidated with the original Consolidation Loan:
Steps for this Example:
Step 1: Fill out a consolidation application online on studentaid.gov to consolidate only your two Parent PLUS Loans together. Pick Nelnet for the servicer. Download a copy of your application to help you with Step 2. It will contain account numbers, balance information, loan type codes, and servicer names needed for your next application.
Step 2: After you have received notice from Nelnet that your new Direct Consolidation Loan has been funded, fill out a paper consolidation application to consolidate your new and old Consolidation Loans. You can send the application to the servicer of your choice, but if you’re pursuing PSLF, send it to MOHELA.
Step 3: After receiving notice that your final Direct Consolidation Loan is funded, fill out a paper Income-Driven Repayment (IDR) Plan Request, choosing the SAVE plan, and mail it to your new servicer. You may be able to upload the completed application through your servicer’s website.
Tips about Consolidation:
- Direct Consolidation Loans need to be consolidated with another loan.
- FFEL Consolidation Loans can be consolidated into the Direct Loan Program even if you do not have another loan to consolidate.
- Direct or FFEL Parent PLUS loans can be consolidated even if you do not have another loan to consolidate.
Servicer Addresses:
Nelnet
PO Box 82658
Lincoln, NE 68501-2658 USA
1-866-426-6765
Aidvantage
Attn: ED Loan Consolidation
PO Box 300005
Greenville, TX 75403-3005 USA
1-800-722-1300
MOHELA
c/o Aidvantage
PO Box 300006
Greenville, TX 75403-3006 USA
1-800-722-1300
EdFinancial
c/o Aidvantage
PO Box 300008
Greenville, TX 75403-3008 USA
1-800-722-1300
Need Help Using the Double Consolidation Loophole?
Please file a Student Loan Help Request with our Office.