Hi Heather,

I have Direct Loans that were issued between 2005 and 2013, and I am interested in knowing, can I consolidate my loans, come July 1st, to become eligible for the new “10% version” of IBR, for new borrowers as of July 1, 2014?

On page 59 of the U.S. Department of Education’s November 2012 Final Rules on PAYE and IBR (http://www.gpo.gov/fdsys/pkg/FR-2012-11-01/pdf/2012-26348.pdf), the Department of Education seems to only have this to say about who is eligible for the new “10% version” of IBR (emphasis in bold is mine):

“New borrower means an individual who has no outstanding balance on a Direct Loan Program or FFEL Program loan on July 1, 2014, or who has no outstanding balance on such a loan on the date he or she obtains a loan after July 1, 2014.”

So, if -after July 1, 2014- I consolidate my loans (all originally issued before 2014), would I be eligible for the “10% version” of IBR? After all, by consolidating (and having my existing loans paid off and the new consolidated loan issued after July 1, 2014), I would have “no outstanding balance on such a [Direct Loan Program or FFEL Program] loan on the date he or she obtains a loan after July 1, 2014,” right?

Heather, if you could provide any clarification on this and/or direct me to any authoritative sources on whether this method is a way to become eligible for the new “10% version” of IBR, I would really appreciate that!