NASFAA recently received confirmation from the U.S. Department of Education (ED) that married couples with a joint FFEL Consolidation Loan are unable to qualify for public service loan forgiveness.

Public service loan forgiveness was among the many provisions included in the College Cost Reduction and Access Act (CCRAA) enacted in the fall of 2007. In order to qualify for forgiveness, a borrower must be repaying an eligible Direct Loan. Included in CCRAA were conforming amendments that allow FFEL borrowers, beginning July 1, 2008, to consolidate or reconsolidate their loans into the Direct Loan Program for the purpose of qualifying for the public service loan forgiveness program.

Spousal loan consolidations haven't been made in a couple of years. The Higher Education Reconciliation Act (HERA) of 2005 eliminated provisions in the Higher Education Act (HEA) that allowed a married couple to obtain a joint consolidation loan. This change became effective on July 1, 2006.

As a result of the changes made by HERA, it is impossible for borrowers with a joint FFEL consolidation loan to reconsolidate their loan into the Direct Loan Program for any reason, including qualifying for public service loan forgiveness. ED would need additional statutory authority to reconsolidate a joint FFEL Consolidation Loan.

By Jennifer Martin
NASFAA Assistant Director for Professional Assessment, Training, and Regulatory Assistance

Posted 08/26/08 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.