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Direct Consolidation Loan Application and Promissory Note

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Direct Consolidation Loan Application and Promissory Note

William D. Ford Federal Direct Loan Program

OMB No. 1845-0053    Form Approved    Exp. Date 04/30/2019

WARNING: Any person who knowingly makes a false statement or misrepresentation on this form or any accompanying document is subject to penalties that may include fines, imprisonment, or both, under the U.S. Criminal Code and 20 U.S.C. 1097.

BEFORE YOU BEGIN

Read the Instructions for Completing the Direct Consolidation Loan Application and Promissory Note (“Instructions”).

NOTE: PAGES 1 THROUGH 5 MUST BE SUBMITTED FOR YOUR LOAN APPLICATION TO BE PROCESSED.

BORROWER INFORMATION

1. Last Name: First Name: Middle Initial:

2. Former Name(s):

3. Social Security Number:

4. Date of Birth:

5. Permanent Address (Street, City, State, Zip Code):

6. Area Code/Telephone Number:

7. Email Address (optional):

8. Driver’s License State and Number:

9. Employer’s Name and Address:

10. Work Area Code/Telephone Number:

REFERENCE INFORMATION

List two persons with different U.S. addresses who do not live with you and who have known you for at least three years.

11. Last Name: First Name: Middle Initial:

Permanent Address (Street, City, State, Zip Code):

Email Address (optional):

Area Code/Telephone Number:

Relationship to You:

12. Last Name: First Name: Middle Initial:

Permanent Address (Street, City, State, Zip Code):

Email Address (optional):

Area Code/Telephone Number:

Relationship to You:

LOANS YOU WANT TO CONSOLIDATE

READ THE INSTRUCTIONS BEFORE COMPLETING THIS SECTION. List each federal education loan that you want to consolidate.

13. Loan Code
14. Loan Holder/Servicer Name, Address, and Area Code/Telephone Number
15. Loan Account Number
16. Estimated Payoff Amount

17. Grace Period End Date (month/year):

LOANS YOU DO NOT WANT TO CONSOLIDATE

18. Loan Code
19. Loan Holder/Servicer Name, Address, and Area Code/Telephone Number
20. Loan Account Number
21. Current Balance

BORROWER UNDERSTANDINGS, CERTIFICATIONS, AND AUTHORIZATIONS

22. I understand that:

A. Applying for a Direct Consolidation Loan does not obligate me to agree to take the loan.

23. Under penalty of perjury, I certify that:

A. The information I have provided on this Note is true, complete, and correct to the best of my knowledge and belief and is made in good faith.

B. All of the loans I have selected for consolidation have been used to finance my education or the education of one or more of my children.

C. All of the loans I have selected for consolidation are in a grace period or in repayment.

D. If I owe an overpayment on specified grants or loans, I have made satisfactory arrangements to repay the amount owed.

E. If I am in default on any loan I am consolidating, I have made a satisfactory repayment arrangement or will repay under an income-driven plan as required.

F. If I have been convicted of fraud involving Title IV funds, I have fully repaid the funds to ED or the loan holder.

24. I make the following authorizations:

A. I authorize ED to contact the holders of the loans I have selected for consolidation.

B. I authorize ED to issue the proceeds of my Direct Consolidation Loan to the holders of the selected loans.

C. I authorize ED and its agents to investigate my credit record and report information about my loan status.

D. I authorize my schools, ED, and their agents to release information to the references I provide and my immediate family members.

E. I authorize my schools, ED, and their agents to share information about my loan with each other.

F. I authorize contact regarding my loan request or loan by phone/text using automated dialing equipment or prerecorded voice.

PROMISE TO PAY

25. I promise to pay ED all sums disbursed under the terms of this Note.

26. If I do not make a payment on my Direct Consolidation Loan when it is due, I will also pay reasonable collection costs.

27. My signature on this Note serves as my authorization to pay off the balances of the loans I have selected for consolidation.

28. I will not sign this Note before reading the entire Note.

29. My signature certifies that I have read, understand, and agree to the terms and conditions of this Note and the Borrower’s Rights and Responsibilities Statement.

I UNDERSTAND THAT THIS IS A LOAN THAT I MUST REPAY.

30. Borrower’s Signature:

Today’s Date (mm-dd-yyyy)

NOTE TERMS AND CONDITIONS

GOVERNING LAW

The terms of this Direct Consolidation Loan Application and Promissory Note will be interpreted in accordance with the HEA and other applicable laws and regulations.

DISCLOSURE OF LOAN TERMS

This Note applies to a Federal Direct Consolidation Loan. The principal amount you owe and are required to repay will be equal to all sums disbursed to pay off your prior loans, plus any unpaid interest that is capitalized and added to the principal balance.

INTEREST

The interest rate on your Direct Consolidation Loan is a fixed rate based on a formula specified in the Act.

REPAYMENT

You must repay the full amount of the Direct Consolidation Loan made under this Note, plus accrued interest.

IMPORTANT NOTICES

GRAMM-LEACH-BLILEY ACT NOTICE

We disclose nonpublic personal information to third parties only as necessary to process and service your loan and as permitted by the Privacy Act of 1974.

PRIVACY ACT NOTICE

The authority for collecting the requested information is provided by the Higher Education Act and related authorities.

FINANCIAL PRIVACY ACT NOTICE

ED will have access to financial records in your student loan file maintained in compliance with the administration of the Direct Loan Program.

PAPERWORK REDUCTION NOTICE

According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless the collection displays a valid OMB control number.

BORROWER’S RIGHTS AND RESPONSIBILITIES STATEMENT

This section provides additional information about the terms and conditions of the loan you will receive under the accompanying Direct Consolidation Loan Application and Promissory Note.

1. THE WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM

The Direct Loan Program includes Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans.

2. LAWS THAT APPLY TO THIS NOTE

The terms and conditions of loans made under this Note are determined by the HEA and other applicable federal laws and regulations.

3. DIRECT CONSOLIDATION LOAN IDENTIFICATION NUMBERS

Depending on the type(s) of federal education loan(s) that you choose to consolidate, your Direct Consolidation Loan may have up to two individual loan identification numbers.

4. ADDING ELIGIBLE LOANS TO YOUR DIRECT CONSOLIDATION LOAN

You may add eligible loans to your Direct Consolidation Loan by submitting a request within 180 days of the date your Direct Consolidation Loan is made.

5. LOANS THAT MAY BE CONSOLIDATED

Only the federal education loans listed in the statement may be consolidated into a Direct Consolidation Loan.

6. INFORMATION YOU MUST REPORT TO US

Until your loan is repaid, you must notify your servicer if you change your address, telephone number, name, employer, or other status affecting your loan.

7. INTEREST RATE

The interest rate on your Direct Consolidation Loan will be the weighted average of the interest rates on the loans you are consolidating, rounded to the nearest higher one-eighth of one percent.

8. PAYMENT OF INTEREST

You are responsible for paying the interest that accrues on your Direct Consolidation Loan during all periods, subject to the rules described in the statement.

9. RESPONSIBILITY FOR PAYING ALL INTEREST ON ALL OR PART OF THE SUBSIDIZED PORTION OF A DIRECT CONSOLIDATION LOAN

If you were a first-time borrower on or after July 1, 2013 when you received a Direct Subsidized Loan and you are now consolidating that loan, you may be responsible for paying interest during all periods on that portion of your loan.

10. INTEREST RATE REDUCTION FOR AUTOMATIC WITHDRAWAL OF PAYMENTS

Automatic withdrawal from your checking or savings account may provide a 0.25% interest rate reduction while you repay.

11. REPAYING YOUR LOAN

You must make payments even if you do not receive a bill or repayment notice. You may choose among several repayment plans, and if you do not choose one, the Standard Repayment Plan will be used.

12. TRANSFER OF LOAN

We may transfer the servicing of one or all of your loans to another servicer.

13. LATE CHARGES AND COLLECTION COSTS

If you do not make any part of a payment within 30 days after it is due, we may require you to pay a late charge.

14. DEMAND FOR IMMEDIATE REPAYMENT

The entire unpaid amount of your loan becomes due and payable if you make a false statement or default on your loan.

15. DEFAULTING ON YOUR LOAN

If you default, you may be required to immediately repay the loan, pay collection fees, and you may lose eligibility for other federal student aid.

16. CONSUMER REPORTING AGENCY NOTIFICATION

We will report information about your loan to nationwide consumer reporting agencies on a regular basis.

17. DEFERMENT AND FORBEARANCE (POSTPONING PAYMENTS)

You may receive a deferment or forbearance under certain conditions.

18. DISCHARGE (HAVING YOUR LOAN FORGIVEN)

In certain cases, your loan may be discharged due to death, bankruptcy, disability, school closure, false certification, identity theft, unpaid refund, teacher loan forgiveness, or public service loan forgiveness.

19. DEPARTMENT OF DEFENSE AND OTHER FEDERAL AGENCY LOAN REPAYMENT

Under certain circumstances, military personnel or other federal employees may have their federal education loans repaid by the government.

END OF BORROWER’S RIGHTS AND RESPONSIBILITIES STATEMENT

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What the Direct Consolidation Loan Application and Promissory Note Is

The Direct Consolidation Loan Application and Promissory Note is the federal form that both requests consolidation of eligible federal student loans into a single Direct Consolidation Loan and documents the borrower's promissory note for that new loan. It collects borrower identity details, lists loans to include, records the chosen repayment plan, and establishes contractual repayment terms under the William D. Ford Federal Direct Loan Program. Lenders and servicers use the form to assign loan ownership and set repayment obligations and interest accrual rules for consolidated accounts.

Sequential steps to complete and submit the form

Follow these sequential steps to complete and submit the Direct Consolidation Loan Application and Promissory Note accurately for federal processing.

  • 01
    Prepare documents: Gather loan statements, SSN, and contact details.
  • 02
    Identify loans: Confirm lender names and account numbers via NSLDS.
  • 03
    Choose plan: Pick a repayment plan that matches income and goals.
  • 04
    Sign & send: Sign promissory note and submit to designated servicer.

Why completing this combined form matters

Consolidation simplifies multiple federal loans into one payment and records the borrower's legal obligation under a promissory note.

Why completing this combined form matters

Who typically completes and relies on this document

Primary users include borrowers, loan servicers, and financial aid administrators who manage federal student loan consolidation.

  • Individual borrowers consolidating multiple Direct, FFEL, or Perkins loans into a single Direct Consolidation Loan.
  • Loan servicers and federal loan processors handling account consolidation, repayment plan enrollment, and promissory note custody.
  • University financial aid offices advising students about consolidation timing, eligibility, and documentation requirements.

Accurate completion benefits borrowers by simplifying repayment and benefits servicers by reducing reconciliation work and preventing misapplied payments.

Core sections you will see on the form

The combined application and promissory note contains structured fields grouping borrower identity, loan selection, repayment election, promissory terms, certifications, and contact details needed for federal processing.

Borrower Information

Name, SSN/ITIN, date of birth, contact details, and borrower identifiers used to match records across servicers and NSLDS.

Loan Listings

Individual loan entries including lender name, account number, and outstanding balance as presented for consolidation consideration.

Repayment Election

Selection of repayment plan and options that will govern monthly payments and eligibility for income-driven plans or forgiveness.

Promissory Terms

Legal language establishing the borrower's obligation to repay, interest accrual provisions, and default conditions under federal law.

Certifications

Borrower attestations about accuracy of information and consent to electronic records where applicable under ESIGN and state law.

Servicer Assignment

Fields indicating which federal servicer will manage the consolidated loan and how communications will be routed.

Security and compliance essentials for electronic handling

Encryption in transit: TLS 1.2/1.3
Encryption at rest: AES-256
Certifications: SOC 2 Type II, ISO 27001
Authentication options: 2FA, SAML, KBA
Audit trail: Timestamps, IP, action history
HIPAA BAA: Available upon request

Key risks and potential consequences of errors

Incorrect TIN: Triggers backup withholding (24%)
Missing signature: May invalidate promissory note
Loan omission: Loan remains outside consolidation
Wrong repayment plan: Changes monthly payment and forgiveness path
Inaccurate contact info: Delays notices and payment instructions
Delayed submission: Prolongs consolidation and servicer assignment

Common preparation pitfalls to avoid

  • Entering an abbreviated name or nickname instead of the legal name, which can prevent verification across loan systems and delay consolidation by multiple weeks.
  • Listing loans with incorrect account numbers or lender names, resulting in omitted loans or additional manual reconciliation by the servicer.
  • Choosing a repayment plan without confirming eligibility, causing the servicer to revert to standard processing and requiring re-enrollment.
  • Failing to consent explicitly to electronic records where required, which can force paper processing and slow turnaround times.

Overview of the consolidation and promissory note lifecycle

This high-level flow shows how you move from application completion to promissory note acceptance and final servicer placement for the consolidated Direct Loan.

  • Application submitted: Borrower sends completed form to servicer.
  • Verification: Servicer confirms loan details and eligibility.
  • Promissory acceptance: Promissory note is signed and recorded.
  • Servicer assignment: Consolidated loan is assigned and scheduled.

Suggested settings for online completion and eSigning

Configure your digital workflow to include required fields, signer authentication, and conditional loan lists for efficient electronic processing.

Field Configuration
Signer Authentication Email plus optional SMS one-time passcode
Conditional Lists Auto-populate loan entries from NSLDS or CSV import
Required Fields Name, SSN, loan numbers, repayment election
Signature Type ESIGN-compliant electronic signature with audit trail

Technical requirements for digital submission and signing

Basic platform prerequisites and integration points for preparing, signing, and submitting the consolidated loan form electronically.

  • Browser Support: Modern Chrome, Edge, Firefox
  • File Formats: PDF and DOCX accepted
  • Integrations: CRM and cloud storage

Timelines and typical processing expectations

Processing times vary by servicer and loan complexity; plan for multi-week to multi-month timelines and track acknowledgements after submission.

Submission acknowledgement:

Expect confirmation within 7–14 days

Verification period:

Servicer review commonly 30–60 days

Consolidation completion:

Typical 30–90 days to finalize

Loan payout to lenders:

Occurs after consolidation finalization

Repayment start:

Start date set per promissory terms

Representative scenarios highlighting common outcomes

Real-world examples show how accurate completion and timely signing affect processing speed and borrower outcomes.

University Financial Aid Office

A school centralized consolidation assistance to reduce errors and phone calls

  • Reduced manual entry by staff using templated forms
  • As a result the office cut follow-ups by half and improved turnaround for student borrowers seeking income-driven repayment options.

Loan Servicer Streamline

A servicer implemented an electronic workflow for promissory notes to ensure complete signatures

  • Automated verification of loan numbers and SSNs
  • This reduced reconciliation time, decreased omitted-loan incidents, and accelerated consolidation completion for borrowers.

Practical tips for accurate, efficient completion

Follow these practices to reduce errors, speed processing, and ensure enforceable promissory note execution.

Verify identity details first
Confirm full legal name and SSN/ITIN against government ID before entering data; mismatches are a primary cause of verification delays and manual intervention.
List loans precisely
Use lender statements or NSLDS exports to ensure account numbers and loan types match; accurate listings prevent omissions during consolidation payoff.
Document repayment choice
Record the chosen repayment plan clearly and retain documentation explaining eligibility; plan selection affects payment amounts and forgiveness eligibility.
Retain audit copies
Keep signed, timestamped copies and an audit trail showing consent and attribution to defend against disputes or servicing errors.

Key processing milestones from submission to repayment

Track these numbered stages to follow the consolidation lifecycle and anticipate where delays commonly occur.

01

1. Submission

Borrower submits application to servicer

02

2. Verification

Servicer validates loan records and eligibility

03

3. Consolidation Issued

New consolidated loan is created and documented

04

4. Repayment Begins

Monthly payments scheduled per chosen plan

eSignature pricing snapshot for signing and processing

Compare basic pricing and feature availability across common eSignature vendors suitable for completing the Direct Consolidation Loan Application and Promissory Note.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial Yes, 7-day trial Yes Yes Yes Yes
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Frequently asked questions and quick resolutions

Answers to common questions about completing, signing, and submitting the Direct Consolidation Loan Application and Promissory Note.


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