Federal Loan Consolidation

Loan Consolidation is a process whereby students can combine their existing Federal student loans issued at different times and at different interest rates into one new loan, thereby extending the repayment term up to 25 years and allowing students to make a single monthly payment. You can consolidate your Federal loans with the Department of Education under the William D. Ford Federal Direct Consolidation Loan Program. To obtain a William D. Ford Direct Consolidation Loan, contact the Direct Loan Origination Center's Consolidation Department at 1-800-557-7392 or go to www.loanconsolidation.ed.gov.

  • The interest rate of the new Federal Direct Consolidation Loan will be the weighted average of the interest rates of the loans to be consolidated rounded to the nearest 1/8th of a percent, capped at 8.25%.
  • Private cannot be included in a Federal Direct Consolidation Loan.
  • Most Federal loans are eligible for consolidation.
  • If you have borrowed through the Federal Perkins Loan Program as an undergraduate, you may be eligible for cancellation of up to 100% of the outstanding balance on these loans for law enforcement or family service agency work. You will lose this benefit if you include your Perkins Loans in a Federal Direct Consolidation Loan.
  • Repayment options on a Federal Direct Consolidation Loan are basically the same as those offered on existing Federal loans. Instead of the Income Sensitive Repayment option, you may opt for the Income Contingent Repayment option under the Federal Direct Consolidation Loan Program.
  • If you are planning to work in the public sector for ten years or more, you may obtain forgiveness of the balance remaining on your eligible Federal loans after 120 monthly payments on these loans in a Federal Direct Consolidation Loan. See the Federal Public Service Loan Forgiveness Program.
Should I Consolidate My Federal Loans?

You may wish to consider consolidation, if
  • you have eligible Federal loans with variable interest rates and want to lock in the rate on those loans. Timing is a factor when consolidating your variable rate loans. The interest rate on variable rate Federal loans increases .6% when those loans go into repayment, so consolidate before your grace period ends.
  • you do not qualify for Extended Repayment or Income Based Repayment, but need to reduce your monthly loan repayments (over $30,000 in Federal debt qualifies you for Extended Repayment).
  • you have multiple loan holders/servicers and want to pay your Federal loans with a single monthly payment.
  • you borrowed a considerable amount in Grad PLUS Loans at 8.5% and have no repayment incentives available to you to reduce that rate and wish to take advantage of the PLUS Loan Rate Loophole to reduce the interest rate on your Grad PLUS Loans from 8.5% to 8.25%. Remember, the interest rate on a Federal Direct Consolidation Loan is the weighted average of the interest rates of the loans to be consolidated rounded up to the nearest 1/8%, not to exceed 8.25%!
  • most importantly, you want to take advantage of the Federal Public Service Loan Forgiveness Program–to be eligible, you must consolidate your FFELP Loans under the Federal Direct Consolidation Loan Program.

Federal Public Service Loan Forgiveness Program

If you are employed in public service for ten years and make 120 payments on your Federal loans in the Federal Direct Loan Program through any one or combination of the Standard (ten-year), Income-Contingent or Income-Based Repayment options during that ten-year period, the government will forgive any balance remaining on your loans. Only those payments made after October 1, 2007 will count toward the required payments. The 120 payments need not be consecutive and you must be employed in the full-time, public service position while making each of the 120 payments and when you request forgiveness. Maintain proof of all 120 repayments and proof of your employment status during those payments. This forgiveness will not create a new income tax liability for borrowers.

Eligible Loans

All federally guaranteed loans are eligible, including Federal Perkins Loans, Federal Subsidized and Unsubsidized Stafford Loans, Federal Grad Plus, Federal Direct and Federal Direct Consolidation Loans. Loans made by a state or private lender and Parent Plus Loans and consolidation loans that included a Parent Plus Loan are not eligible for FPSLF.

Fine-Print Details of the Federal Public Service Loan Forgiveness Program, not to be overlooked:

Be sure your job qualifies for Federal Public Service Loan Forgiveness. Your job qualifies if you work full-time for the government or a 501(c)(3) non-profit organization. If you do not work for a 501(c)(3) non-profit organization or the government, you can still qualify if you provide "public interest law services" for a "public service organization." A public service organization gets at least some government funding and is not "a business organized for profit, a labor union, a partisan political organization, or an organization engaged in religious activities…." To determine if your job qualifies for FPSLF, see 34 CFR 685.219, or go to www.FederalStudentAid.ed.gov and click on Public Service Loan Forgiveness under Repaying Your Loans. Also, you may contact the Federal Student Aid Information Center at 1-800-433-3243.

Be sure your loans are eligible for Federal Public Service Loan Forgiveness. Only Federal Direct Loans and Federal Direct Consolidation Loans are eligible for Public Service Loan Forgiveness. If you borrowed your Federal Stafford and Grad PLUS Loans prior to 7/1/10, you borrowed those loans through the Federal Family Education Loan Program (FFELP). To make those loans eligible for the Federal Public Service Loan Forgiveness Program, you most consolidate those FFELP loans into a Federal Direct Consolidation Loan. If you have already consolidated one or more of your Federal Loans into a FFELP Consolidation Loan, you have the right to reconsolidate those loans into a Federal Direct Consolidation Loan to take advantage of the forgiveness program.

Be sure not to include ineligible loans in your Federal Direct Consolidation Loan. Parent PLUS Loans are not eligible and consolidation loans that pay off a PLUS Loan are not eligible for Federal Public Service Loan Forgiveness.

Be sure your payments are qualifying payments. Only payments made on the Income Based, Income Contingent or Standard (ten year) Repayment Plans will count toward Public Service Loan Forgiveness. Do not choose the Extended or Graduated repayment options, as payments under these plans will not count toward Federal Public Service Loan Forgiveness. Under the Federal Direct Consolidation Loan Program, repayment over a term of more than ten years is sometimes referred to as "standard" repayment. Don't be fooled. Check to be sure the payments under the payment plan you select qualify for FPSLF. Finally, only payments made on time - those received within 15 days of the due date - will count.

See the Federal Student Aid Fact Sheet for a summary of the Federal Public Service Loan Forgiveness Program. For more detailed information, consult the Department of Education's Federal Public Service Loan Forgiveness Questions and Answers.

Federal Loan Forgiveness for Service in Areas of National Need

Entitles borrowers to receive forgiveness of not more than $2,000 of their Federal student loan obligation that is outstanding after the completion of each year of employment up to a total of $10,000 and for not more than five years of service. The one area of need that pertains to law graduates is under the heading of Public Sector Employees which includes public interest legal services (including prosecution, public defense, or legal advocacy in low-income communities at a non-profit organization). Borrowers will not qualify for loan forgiveness for the same service in this provision and other provisions of the College Opportunity and Affordability Act.

LRAP Hofstra Law School Loan Repayment Program

Upon graduation, students who enter qualified areas of public interest employment may be eligible for LRAP to assist them with repaying their Hofstra Law School Loan debt. LRAP provides loan repayment assistance on a quarterly basis to qualified graduates. Thus far, our assistance has been limited to forgiving portions of outstanding Hofstra University School of Law Loans.

Criteria:

  • You must have official state Bar Membership and be employed as an attorney by a government agency (local, state or federal) or by a non-profit employer satisfying Internal Revenue Code §501 (c) (3) or (4) for at least 6 months prior to application.
  • You must be employed full-time in such a job during the entire calendar year. As in similar programs, judicial clerkships will not be included in this program.
  • Your current income cannot exceed $56,000.The graduate’s income is calculated on the greater of (a) his or her income or (b) half the joint income of the graduate and his or her spouse. On calculating income, we will take a deduction of $3,500 per child for dependent care.

Required Items to Apply for Program:

  • A completed Hofstra Law School LRAP application form (PDF).
  • Employer Certification Form (PDF) for the applicant, completed by the employer and indicating dates of employment, job title and annual salary Employer Certification form.
  • Signed photocopy of the applicant’s (and spouse’s) most recently filed Federal income tax return form 1040, 1040A, or 1040EZ, with all accompanying Schedules and photocopies of all W-2 forms.
  • A photocopy of the Hofstra Law School Loan billing statement

Hofstra University School of Law reassesses the program guidelines in accordance with the available resources each year. If a student is already in the Assistance program, the student will be required to re-apply each year by resubmitting an application with required forms to review eligibility. If while in the program, you make any changes that no longer fit the criteria of the program, you must contact the Financial Aid Office immediately.

New York State Attorney Loan Forgiveness Program

District Attorney Loan Forgiveness awards are being offered to retain experienced attorneys employed in district attorney offices throughout New York State.

Eligibility

To be eligible an applicant must meet all of the following criteria:

  • Be a legal resident of New York State for at least one year
  • Be a U.S. citizen or an eligible noncitizen
  • Be an eligible attorney
  • Have eligible student loan expenses*
  • Be admitted to practice law in New York State
  • Have held a degree from a law school for not more than 11 years
  • Have been employed by a district attorney’s office in New York State for at least four years**
  • Be a district attorney or assistant district attorney who is employed full time and has been employed full time during the year of qualified service*** immediately preceding their application

*Eligible student loan expenses means the total cumulative loan balance, at the time of application, required to be paid by the eligible attorney for student loans covering the cost of attendance at an undergraduate institution(s) and/or law school(s). Eligible student loan(s) include New York State or federal governmental loans, or loans made by commercial entities subject to governmental examination. This does not include PLUS loans, or loans which may be canceled under any other program including Perkins loans, or private loans given, for example, by family or friends, or student loan debts paid with a credit card. The attorney must not be in default on any student loan unless said loan is guaranteed by New York State Higher Education Services Corporation.

**Credit may be given for periods of time during which a district attorney was a law school graduate who, while awaiting admission to the New York State Bar, was employed by a prosecuting or criminal defense agency.

***Year of qualified service means the fourth through ninth years (365 days each) of full-time employment by a district attorney’s office as a district attorney or assistant district attorney in New York State.

How to Apply

Applications are generally available after July, 1.

Duration

Award disbursements under this program are available for up to six years of qualified service (based on available funding).

Award Amounts

The maximum lifetime total award an eligible attorney may receive under this program is $20,400 or the cumulative total of their eligible student loan expenses at the time they first apply, whichever is less. Eligible student loan expenses will be reduced by any grants, loan forgiveness, or similar reductions to the attorney’s indebtedness that the attorney has received or shall receive, including, but not limited to, law school loan forgiveness and public service scholarships.

Award Payment

Awards will be paid in disbursements of $3,400 for each year of qualified service immediately preceding the application for payment.

The District Attorney Loan Forgiveness Program Supplement will be used to establish a district attorney’s or assistant district attorney’s eligibility as well as process a recipient’s first award disbursement. In subsequent years, an award recipient must submit a payment application and verification of the preceding year of qualified service for which they seek an award disbursement.

For more information please go to: www.hesc.ny.gov

NYSBA Student Loan Assistance for the Public Interest (SLAPI)

Recognizing that the burden of law school debt can seriously shrink the pool of qualified candidates for public interest work, the New York State Bar Association (NYSBA) has launched the Student Loan Assistance for the Public Interest (SLAPI) program. To be eligible, you must have been admitted to the bar within the last five years, work full-time in a designated public service position, have incurred law school debt through institutional sources and meet enumerated salary limitations. To apply for a SLAPI award, complete an application and two certification forms and submit them by the deadline. More information about SLAPI, including an application form, can be found by visiting the NYSBA Web site.

LRAP Resources

The ABA’s Web site has some useful information concerning Federal, State, and Employer LRAP Programs. It is available at: www.abanet.org/legalservices/sclaid/lrap/home.html.