DB and DSIL are working on consolidating DB's student loans. They initially contacted ACFS on my suggestion because that's who we are consolidating DH's lonas through. But ACFS told them that because all DB's Federal Stafford Loans (?) are held by Wells Fargo, they can only consoldidate them with Wells Fargo or the DoE. But DB also has other loans with other lenders besides WF. So what's the scoop??? Thanks!

Fiona

Single Holder Rule and Early Repayment Status Loopholes

The single holder rule is an anticompetitive rule that limits a student's choice of lenders for consolidation. If all of a student's FFELP loans are with a single lender, they must consolidate with that lender. If the student has FFELP loans with more than one lender, they can choose to consolidate their loans with any lender.

The early repayment status loophole also limits competition, because the holder of a continuing student's loans is under no obligation to grant early repayment status. If the holder refuses to grant early repayment status, it would appear that the student cannot consolidate with a different FFELP lender.

This section of FinAid describes several ways of bypassing these restrictions.


Bypassing the Single Holder Rule

There are a variety of loopholes that allow a student to bypass the single holder rule. Some of the following loopholes have not yet been confirmed as valid by the US Department of education.


If the borrower certifies that he/she has "sought and has been unable to obtain a consolidation loan with income-sensitive repayment terms" from the holder of his/her loans, the borrower can consolidate with any lender. (HEA Section 428C((1)(A))
If the borrower is "unable to obtain to obtain a consolidation loan with income-sensitive repayment terms acceptable to the borrower", the borrower can consolidate with the Federal Direct Consolidation Loan program. Even if the holder of the loans offers income-sensitive repayment terms, the borrower can consolidate with Federal Direct Consolidation by certifying that the income-sensitive repayment terms are not acceptable. (HEA Section 428C((5))
If the borrower is still in school and has remaining Stafford Loan eligibility, the borrower can obtain a Stafford Loan from a different lender. (The single holder rule only limits a borrower's ability to choose a consolidation lender. It does not limit a borrower's ability to choose a different Stafford loan lender.) As soon as the borrower has FFELP loans with more than one lender, the single holder rule no longer applies.
If the borrower consolidates a Perkins Loan into a FFELP consolidation loan with a different lender, the single holder rule no longer applies. (Dear Partner Letters FP-04-06, FP-04-05, and FP-04-02)

How do I/they know whether "all FFELP(?) loans are with a single lender"? This is what comes up on nslc.com:

As Of Date Member Name
05/13/2005 STUDENT LOAN FINANCE CORPORATION
05/03/2005 WELLS FARGO EFS (NORWEST)
05/10/2005 GREAT LAKES HIGHER EDUCATION CORPORATION

I don't know specifically which loans my DB may have are held with which company - the info his school gave him just listed "Stafford Loans" (all Wells Fargo) and "Other Loans" (two with AIG or AGI - can't remember offhand - and two with "Choice"). No account numbers or identifying information or anything, just the lender name.

I'm going to have DB/DSIL log into the websites for the above companies to find out exactly which loans are where and hopefully that will enlighten us a little bit.

Any other insights in the meantime?

Fiona

These are FFELP loans. Great Lakes is the guaranty holder.