The reasons for switching from Sallie Mae to Direct Loans are many, but let’s start with the first one: Direct Loans will FORGIVE the loan balance after 25 years of payments… even if you are on an “Income Sensitive Payment Plan”.

Now, 25 years may seem like a long time to have such a massive amount of non-dischargeable debt (some chiropractic graduates have as much as $200,000!!), but Sallie Mae will NEVER forgive the loans. In my opinion, this is basically a debt prison that you can’t ever get out of.

Think of it this way: If I ran up a bunch of credit card bills and later filed bankruptcy, these debts would be forgiven from my credit reports in seven years time.

But college loans are NON-DISCHARGEABLE. Fair, huh?

STEP 1: Get A Password

The first step to getting out of Sallie Mae and into Direct Loans is to get a PIN number.

You can do this by going to pin.ed.gov and filling out some basic information (name, social security number, birthdate, etc.).

By the way, the number for Direct Loans is 1-800-557-7392. Operators are available from 7am-7pm, EST.

From my experience, the folks at Direct Loans are much nicer to work with than anyone at Sallie Mae.

Once they send you a PIN, you can get a list of all your loan debts and total up the damage.

STEP 2: Get A List Of All Your Loans

The next step is to get a complete list of all the loans you’ve taken out.

One way to get a list of all your loans is to call the National Student Loan Data System. Their number is 1-800-433-3243. They are open 8 AM – midnight. (I tried to get a list of my loans this way, but it is pretty slow to have an operator read it out on the phone to you and I wanted a print-out of all my loans.)

So I’m going to try getting a list of my loans at their website, which is www.nslds.ed.gov. I got the PIN number so I could access this information.

STEP 3: Consolidate Your Loans

After you’ve gone to the National Student Loan Data System at nslds.ed.gov and gotten a list of all your student loans, head over to Direct Loans’ loan consolidation webpage at www.loanconsolidation.ed.gov and fill out an application. They will ask for basic information like your name and address, social security number, and birthdate.

They will also ask for two references; be careful who you list here because that’s who they will call if you have any problems paying back your loans. I recommend listing an understanding friend who knows about your student loan hell situation.

Then they will ask you to list ALL YOUR LOANS. This is the scariest part of the process. In my case, I have so many loans that entering all the information was very time consuming (in fact, it might’ve been simpler to just fill out a paper application). I also worried that I would not list all the loans and some would miss the consolidation… luckily, I got them all down somehow.

Here is the fastest way I found to get this information entered – if you have a lot of different loans:

1. Open the NSLDS website in one window (this is the list of all your loans with amounts, lender names, etc.)
2. Open the Direct Loan consolidation application in another window
3. Open Microsoft Notepad – use it to cut and paste the addresses of lenders to save time

Chances are that you might get lucky and only have three or four different lenders. In that case, you won’t have to retype all the addresses so many times. You just choose the TYPE OF LOAN (for me, this was either Stafford Subsidized or Unsubsidized) and enter the amount for each separate entry. I’m not sure what to tell you about the account numbers; that information does not appear to be listed in the NSLDS database.

If you do it this way, you should get a nice steady rhythm going as you enter the different amounts. I put on some music to make the task seem less like torture (staring at little numbers on a computer screen is a kind of torture, at least for me). All in all, the process took a little over an hour.

Once you consolidate through Direct Loans, you get a six month grace period where no one will be calling you and harassing you… or your references. Sweet.

After you finish the application, you might want to go back and check one more time to make sure that you listed all your loans. Then just follow the rest of the instructions; you can sign the application electronically and submit it online.

You should call Direct Loans after five business days to see if your application is approved. Good luck!

(This information was last updated in July 2007. If anything here is inaccurate or if you wish to comment about your experience consolidating into Direct Loans, please send me your comments.)

These are some links about Sallie Mae. Many DCs have their loans with this company

• How To Consolidate Your Loans Into Direct Loans — And Hopefully Get Them Out Of Sallie Mae
• Student Loan Justice website
• CBS News Story: Is Sallie Mae’s Success Too Costly?
• “Financial Roulette With Sallie Mae” (article in Salon.com)