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<<The Federal guidelines, which have been cited somewhere in the last 30 days by one of the two resident experts, w505 or xraymd, state that they will assume the loan dependent on it being released or the carrier not offering an ICR. Most of us hopeful consolidators are presuming that the much superior rate that Direct is offering, unmatched by any private lendors, counts enough toward lacking an ICR. This is open to a bit, or more, of interpretation.>>

Matt, I agree there is a lot of controversy about what the rule means. I don't remember if we actually found the regs on it, but everything that Direct Loans produces indicates that the ultimate decision is always with the borrower.

Please look at this publication of Direct Loans. Here is a quote from it:

<<Borrowers with Student Loans

If your student loans are in the grace period
or in repayment,you must:

(1)have an outstanding balance on a Direct
Loan or

(2)have an outstanding balance on a FFEL
Program loan and be unable to obtain a
Federal Consolidation Loan from a FFEL
Program lender or

(3)have an outstanding balance on a FFEL
Program loan and be unable to obtain a
Federal Consolidation Loan from a FFEL
Program lender with income-sensitive
repayment terms you find acceptable.>>

I really think that "(3)" includes both the right of the borrower to choose Direct over another servicer, and to base that decision on Direct Loan's lower rate. It sounds like, if you say: "I do not find these terms acceptable," those are the so-called "magic words" that let you enter Direct.

A lot of the confusion about the rule, I would say, is probably being caused by the loan servicers who do not want to give up a loan with a high rate of interest! I bet no one is fighting for the 5.99% loan consolidations, but if you have 9%, they are trying to handcuff you to their place.

I posted about that problem sometime back. Has there been anyone with a low post-July-1st rate who is being given a hard time by their (private) servicer?
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