What will consolidating a perkins loan do
Under the FFEL Program, loans were made by banks and ultimately guaranteed by the taxpayer in case you didn’t make your payments. Loans from both of these programs are FEDERAL student loans.The main way the programs differ is in who made you the loan in the first place.Using a consolidation loan to pay off debt with collection agencies can get them off your back.
However, FFEL Program loans are not eligible for Public Service Loan Forgiveness or the best income-driven repayment plans. It will effectively convert your FFEL Program loans into Direct Loans.
A consolidation loan can clear out your debt with Uncle Sam to help you avoid tax penalties and other repercussions.
By using debt consolidation loans, you can save considerably — sometimes up to 40 percent of the total debt.
Lastly, understand that some of the loans that we called out for consolidation are those from another federal student loan program called the Federal Perkins Loan Program.
Those loans have their own cancellation benefits that are based on your job.