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Federal Direct Consolidation Loan Application

PublicationDate: 8/28/97
Summary: Federal Direct Consolidation Loan Application
Author: OPE - Office of the Assistant Secretary for OPE

Dear Colleague:

The purpose of this message is to correct any misinformation you may have heard
concerning recent actions taken by the Department of Education. As of August 26,
1997, we temporarily ceased accepting Federal Direct Consolidation Loan
applications. We are taking this action so that we can focus our efforts on processing
current applications. To be fair to new customers, we will not accept new applications
until we are able to process them in a reasonable amount of time. Our top priority is to
process current applications as soon as possible; we will let you know when we resume
accepting applications.

In the meantime, we continue to process loan applications in progress. We have
delayed the last phase of consolidation for a short period of time while we take some
immediate actions to correct deficiencies. But we continue to process and move
applications forward to this point.

We are advising borrowers as follows:

If you would like to consolidate your debt and you have only FFEL loans, you can
consolidate them along with any Perkins loans and any eligible Health Profession
Loans under the FFEL program. You should contact one of the holders of your FFEL
loans for information about FFEL loan consolidation.

If you consolidate into FFEL, you may still be eligible to consolidate that new loan
into the Direct Loan Program later to take advantage of different repayment options.

The law does not allow Direct Loans to be consolidated into FFEL loans. However, at
this time, you may choose to consolidate your other loans into a FFEL consolidation
loan and reconsolidate into the Direct Loan Program later.

I deeply regret the inconvenience, but believe that this is ultimately the best way to
ensure quality service to our customers in the consolidation of their loans into Direct
student loans. I will keep you updated as to our progress.


Elizabeth M. Hicks
Deputy Assistant Secretary
Student Financial Assistance Programs

Last Modified: 08/16/1999