The type of federal student loans you have can be difficult to discern—or remember. But not knowing can be costly if you’re considering applying for public-service loan forgiveness, or if you mistakenly thought your loans qualified for a pandemic-related suspension of payments.
Certain loan types are eligible for public-service loan forgiveness only if they are consolidated. Consolidating loans is not hard to do, but whether or not it’s worth it depends on your circumstances.
Payment forbearances granted for reasons related to Covid-19, meanwhile, aren’t available for certain loan types. Borrowers who mistakenly thought that their loans qualified could face default if they don’t address the problem soon.
What type of loans you have depends in part on when the loans were taken out. The current program consists of four types of Direct Loans: Subsidized Stafford, Unsubsidized Stafford, Parent and Graduate Plus loans and Consolidation loans. These loans are all eligible for public-service loan forgiveness and pandemic-related forbearance.
Older loans
But there are older types of loans as well, and the distinction matters for several reasons. For instance, when applying for public-service loan forgiveness, older, discontinued loan types—Federal Family Education (FFEL), Perkins and HEAL loans—have to be consolidated to be eligible. But consolidation for some borrowers with older loans won’t make sense, says Betsy Mayotte, president and founder of the Institute of Student Loan Advisors, a nonprofit that helps borrowers make better loan-financing and repayment decisions.
