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(GEN-06-20) Update on Consolidation Loan Issues

Publication Date: December 2006




Subject: Update on Consolidation Loan Issues

Summary: The attachments to this letter discuss some of the revised eligibility requirements for consolidation of loans in the FFEL and Direct Loan programs and reminds FFEL Program participants of their obligation to promptly complete and return Loan Verification Certificates. It also provides additional information on the implementation of restrictions on a borrower's eligibility to consolidate an existing Consolidation Loan.

Posted on 12-01-2006

Dear Colleague:

Recent legislative actions have made substantial changes to the eligibility requirements for borrowers consolidating Federal education loans into a Consolidation Loan in the Federal Family Education Loan (FFEL) Program or the William D. Ford Federal Direct Loan (Direct Loan) Program. Specifically, the Higher Education Reconciliation Act of 2005 (Pub. L. 109-171) (HERA) and the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006 (Pub. L. 109-234) amended the Higher Education Act of 1965, as amended (HEA). We have summarized the revised requirements for Consolidation Loans in Attachment A. This information is presented in graphic form in Attachment B.

Loan holders should remember that, under the Department's regulations, they are required to complete and return each Loan Verification Certificate (LVC) submitted by a FFEL lender or by the Direct Loan Program within ten business days of its receipt. More information in about this requirement is included in Attachment C.

Finally, attachment D to this letter provides additional information on the deadlines included in Dear Colleague Letter FP-06-03 related to the implementation of the restrictions on the eligibility of a Consolidation Loan to be included in another Consolidation Loan.

We thank you for your cooperation. If you have any questions on the issues discussed in this letter, please contact Pamela Moran by email at or by phone at (202) 502-7732.


James F. Manning
Acting Assistant Secretary for
Postsecondary Education


Last Modified: 11/30/2006