Hello Heather,

I was told (by numerous reps of my current loan servicer) before consolidating with them that doing so would reset the 3-year clock on all types of deferments. After consolidating, this turned out not to be the case and no one can tell me why. Instead, I only have what months were left on deferments before consolidating, while discretionary forbearance is the only thing that got its clock renewed. Do you know why this might be? I do have some loans that are pretty old, dating back to mid 90s on the very first one. Could that be a factor? The servicer doesn’t seem to have (a rep with) an answer for me. The only thing I could find doing an internet search is that, consolidation loans **may qualify** (not WILL qualify) for renewed deferments, but no details as to what “may” entails.

Thank you.

sc70, I came across your post by chance and I thought I’d answer the question for you. I know its been about 7 months, so forgive me if this question is no longer relevant for you.

Consolidating your loans will reset the clock on your forbearance because it becomes a new loan with a new contract. Forbearance is one of the few repayment options that is discretionary or up to the lender.

As you found out, however, your deferment carries over, even if you switch servicers. This is due to the regulations surrounding student loans in the HEA.

HERE IS THE EXCEPTION: If your oldest loan was originated prior to July 1st, 1993, then your loans prior to consolidation were subject to the regulations in place at that time. Even different regulations were in place before the same date in 1987. When you consolidate and pay off very old loans, you effectively change the date of your oldest loan which will now allow you to take advantage of the new regulations. the USDOE likes to grandfather the regulations that apply to your loans, but once you consolidate them, the grandfathering no longer applies.

Let me give you an example, lets say you took out loans in 1985 and since then you have used 3 years of unemployment deferment. Prior to consolidating, you do not qualify for any more unemployment deferment as you have used all 3 years, nor will you qualify after consolidating since unemployment deferment was a deferment option both in 1990 and now, 2015. Prior to consolidating, you could potentially qualify for the Working Mom Deferment since your loans are so old. However, once you consolidate in 2015, you will no longer qualify for the deferment since it is no longer offered as a part of the reg changes after 1993. In this way, you actually give up some of your options.

Or, it could help you. Lets say you have a parent plus loan from 2004. This loan does not qualify for any of the income driven plans, including PAYE, IBR and ICR. However, if you consolidate it you now potentially qualify for the ICR program (Income Contingent Repayment).

Let me know if that doesn’t fully answer your question.

Best,

Jan Miller
Student Loan Consultant

Are deferments loan specific, or person specific? What happens if you have two loans, had 6 months unemployment deferment on one loan, and 2 years unemployment deferment on another loan, and then consolidate? Would the deferments of both loans add up if they were at different times, or would they reset?

Loan Specific. Each loan will individually qualify for up to 3 years of unemployment deferment.

If your maxed out on one loan but not the other, you can still use the deferment, if you qualify, for the other.

Jan Miller