The Double Consolidation Loophole for Parent PLUS Loans: Step-by-Step Guide

• Double consolidation means submitting three applications in two rounds to make your Parent PLUS Loans qualify for lower monthly payments.

• You no longer need to send applications to different servicers — Aidvantage now handles all consolidations.

• You must start by the last week of January 2025 to finish before the June 30 deadline.

The Double Consolidation Loophole for Parent PLUS Loans is a strategy that reduces your monthly payments through better income-driven repayment plans (such as PAYE, IBR, or SAVE) achieved by consolidating your loans twice.

This step-by-step guide explains how to:

• Check if your loans qualify.

• Submit the necessary applications in two rounds.

• Choose a repayment plan that suits your needs.

Whether you’re just exploring the process or ready to begin, this guide provides the detailed instructions and key deadlines you need to lower your monthly payments successfully.

Not sure if consolidating your Parent PLUS Loans is the right step? Our Guide to its Pros and Cons lays it all out.

The Double Consolidation Loophole helps Parent PLUS Loan borrowers access more income-driven repayment plans and lower monthly payments by consolidating their loans twice.

Here’s how it works:

• Step 1: Combine your loans into two separate Direct Consolidation Loans.

• Step 2: Combine those two loans into a single Direct Consolidation Loan.

Why does this matter?

Parent PLUS Loans are limited to the Income-Contingent Repayment plan— the most expensive income-driven option. By using the double consolidation process, you can qualify for more affordable plans, including:

• Saving on a Valuable Education (SAVE)

• Income-Based Repayment Plan (IBR)

• Pay As You Earn Plan (PAYE)

These plans base payments on your income rather than the loan balance, making your monthly payments significantly lower.

I know this might sound confusing, but stick with me. I’ll break it down step by step so you can use the double consolidation loophole to lower your monthly payments.

Before starting, confirm whether your loans qualify. The double consolidation loophole works specifically for Parent PLUS Loans.

You’re eligible if:

• You have federal Parent PLUS Loans issued by the U.S. Department of Education (not a private lender).

• You have older FFEL Parent PLUS Loans (issued before 2011 under the discontinued FFEL Program).

• You’ve already consolidated a single Parent PLUS Loan into a Direct Consolidation Loan. You can still use the loophole by pairing it with another federal loan, like a Stafford, Perkins, or Grad PLUS Loan.

• You have other federal loans. Stafford, Perkins, and Grad PLUS Loans can be paired with at least one Parent PLUS Loan to complete the process, though they don’t need double consolidation.

You’re NOT eligible if:

You have private parent loans. Private loans aren’t eligible because the Department of Education can’t pay off or absorb them—they can’t become federal student loans.

So they can’t be combined with your Parent PLUS Loans.

If you have private loans you borrowed or cosigned for your children, look to refinance them to get a lower interest rate or longer repayment term.

Take a look at our guide on what happens when you refinance your private parent loans and how to get started.

How to Check Your Loan Types

Check your loan details on StudentAid.gov. Follow these steps:

• Step 1: Use your Federal Student Aid (FSA) ID to access your account.

• Step 2: Find the Loan Breakdown section to view all your loan information.

• Step 3: Look for loan labels such as Parent PLUS, Direct PLUS Loans, FFEL PLUS Loans, Stafford, Perkins, or Grad PLUS Loans to determine your loan type.

Double consolidating Parent PLUS Loans involves two steps: creating two separate consolidated loans and then combining them into one.

Here’s a clear breakdown to guide you through the process.

Round 1: Submit Two Paper Applications Simultaneously

• Why paper? Submitting online locks you from filing a second consolidation for 180 days — too long to meet the June 30, 2025 deadline.

• Timing: Send both paper applications at the same time. The loan servicer will process them together, taking about 6-8 weeks.

• Why two applications? Each creates a separate consolidated loan, which is required for the next step.

You no longer need to use different student loan servicers for each consolidation — and you can’t.

All consolidation applications, regardless of which loan servicer you select (EdFinancial, MOHELA, Nelnet, etc.), are now processed centrally by Aidvantage.

Aidvantage handles the entire consolidation process and forwards the completed loan to your chosen loan servicer afterward.

The key is filling out the paperwork accurately. On each application, clearly show:

• The loans you want to consolidate.

• The loans you don’t want to consolidate.

• Then, reverse the setup on the second application

Round 2: Submit the Final Direct Consolidation Loan Application

Once both initial consolidations have been fully processed and you see two Direct Loans on your StudentAid.gov account, submit the final application (online or by paper). This step combines both loans and takes about 6-8 weeks to process.

How to Avoid Delays

• Send Both Applications Together: Submitting both paper applications simultaneously ensures faster processing.

• Wait for Confirmation: Don’t submit the final consolidation until both initial consolidations are complete.

• Check for Errors: Aidvantage will send a Loan Summary Statement within a few weeks. Review it carefully for missing loans or errors. If you spot a mistake, contact Aidvantage immediately — you won’t need to restart the process.

Timing Recap

• Round 1: Send both paper applications → 6-8 weeks for processing.

• Round 2: Submit the final application → 6-8 weeks for processing.

Start no later than January 2025 to meet the June 30, 2025 deadline.

If you’re unsure how to split your loans across both applications — or want help avoiding costly mistakes — our student loan experts can guide you through the entire process.

After processing the two separate consolidations from Step 2, the final step is to complete the third consolidation.

This is where you finish the process you started—combining both loans into a single Direct Consolidation Loan to access lower-cost, income-driven repayment plans.

Here’s how to complete the last consolidation:

• Wait for Confirmation: Log in to StudentAid.gov and confirm that both consolidation loans are processed. Make sure two separate Parent PLUS Consolidation Loans are listed. If they’re not, wait—submitting too early can disrupt the double consolidation process.

• Submit the Final Application: File the final application online for faster processing, but we recommend using a paper application to avoid automatically placed in an ICR plan (most expensive IDR option). With a paper application, you can include an IDR Plan Request Form to select more affordable options, such as PAYE, IBR, or SAVE plan.

• List Both Consolidation Loans: Include both loans from your earlier consolidations. Double-check the loan details for accuracy to avoid delays.

Loan Code to Use for Double Consolidation

The loan code for the final double consolidation step is typically K (Direct Unsubsidized Consolidation Loan).

When completing the Direct Consolidation Loan Application, you might see options for:

• K – Direct Unsubsidized Consolidation Loan (most common for Parent PLUS loans)

• E – Direct Subsidized Consolidation Loan

• 9 – Direct Subsidized Consolidation Loan – Subsidy Loss Eligible

Do you have to enter a code? No. You can leave the field blank, and your application will still be processed without delay. The code does not affect repayment options, loan forgiveness eligibility, or interest rates.

Why mention it? In rare cases where multiple loans have nearly identical balances, leaving the code blank could confuse the servicer on which loan is being referenced. This issue happened once or twice in many years I’ve submitted consolidation paperwork.

For further details, refer to the official Direct Consolidation Loan Application Instructions.

After consolidating your loans, select an income-driven repayment plan (PAYE, IBR, or SAVE) to lower your monthly payments. These plans base payments on your income and family size, not your loan balance.

You’ll usually choose a plan while completing the final consolidation application. If you’re unsure or expect changes in your income, you can decide later.

If you don’t select a plan, your loan will default to the 10-year Standard Repayment Plan.

You can request forbearance (temporary payment pause) through your loan servicer or by submitting a request on StudentAid.gov if you need more time to decide.

Note: The SAVE Plan is currently blocked due to legal challenges. But PAYE and IBR still offer lower monthly payments than ICR, the most expensive option for Parent PLUS borrowers.

If you are considering switching to the IBR plan, our IBR Monthly Payment Chart provides examples to help you estimate your monthly payments.

If you’ve completed the double consolidation process but still get a bill showing the same—or even higher—monthly payment, don’t panic.

It doesn’t mean the process failed or that your efforts were wasted. It’s just a temporary issue caused by ongoing processing delays.

Here’s what’s happening:

• Processing Forbearance Hold: After you submit your IDR application, your loans enter a processing forbearance. Payments are paused while your application is reviewed.

• Why the Bill Looks High: Servicers may continue sending statements showing your old payment amount while your application is still pending. This doesn’t mean you’ve been denied or that your double consolidation strategy didn’t work.

• What You Can Expect: The SAVE Plan litigation has slowed IDR enrollment processing, with no clear timeline for resolution. To avoid this, you can choose IBR instead, though some delays may still occur while your Direct Consolidation Loan is reviewed.

You don’t need to worry. Seeing a higher bill during this waiting period doesn’t mean you’ve done anything wrong. You won’t face late fees or default, but interest may continue to build up until the review is complete.

Not yet — but it will close on July 1, 2025. To finish before the deadline, start the process by January 2025.

The double consolidation process typically takes 4-6 months when done correctly. In rare cases, we’ve completed it in as little as 10 weeks, but that’s not the norm.

What Happens If You Miss the Deadline?

If you miss the June 30, 2025 deadline, your repayment options will be limited to plans with higher monthly payments. Here’s what you’ll be left with:

• Income-Contingent Repayment: 20% of discretionary income, often resulting in significantly higher payments than other IDR plans.

• Extended or Graduated Repayment: Lower monthly payments by extending repayment up to 25 years, but you’ll pay more interest over time — and payments made on these plans won’t qualify for Public Service Loan Forgiveness.

Assumes a married borrower with a combined household income of $75,000, a family size of two, and a loan balance of $100,000 at 6.8% interest.

Yes, the double consolidation loophole still works.

You might be asking this because the SAVE Plan is currently blocked due to litigation. But double consolidation isn’t about the SAVE Plan — it’s about avoiding high-payment plans like ICR.

Even if SAVE goes away completely, double consolidation still unlocks access to better repayment plans, including:

• PAYE: 10% of discretionary income, often lower than ICR.

• IBR: 10-15% of discretionary income, depending on loan origination date.

Should You Pursue Double Consolidation?

Yes, you should. Despite uncertainty around the SAVE Plan, double consolidation opens up more ways to reduce your monthly payments—with no real downside.

The truth is that standard repayment options for Parent PLUS Loans are often unaffordable.

Double consolidation is your key to accessing repayment plans that base your payments on your income, making them much lower.

What If those repayment plans go away?

You’re no worse off than if you had done a single consolidation. You’d still be eligible for ICR — the same option you’d have without double consolidating. But, when double consolidation works, the benefits can be massive.

I have worked with many borrowers who have seen remarkable results using this strategy:

• A borrower with $700,000 in Parent PLUS Loans reduced their monthly payment from $11,000 to $70.

• A retired parent on Social Security dropped their payment from over $1,000 to $0.

Here’s the deal: Double consolidation puts better options on the table. The potential savings far outweigh the effort it takes to complete the process.

Yes, double consolidation will affect your payment count for Public Service Loan Forgiveness (PSLF).

When you complete the double consolidation process, your PSLF credit will be recalculated using a weighted average of the qualifying payments from each loan included in the consolidation.

This means your PSLF progress won’t fully carry over. Instead, the new credit count will be based on loan balances and their individual payment histories.

Example:

• Loan A: $30,000 with 60 PSLF credits

• Loan B: $30,000 with 0 PSLF credits

• The final consolidated loan would start with 30 PSLF credits — not the full 60.

The more loans with fewer credits included, the lower your recalculated PSLF count will be. Since double consolidation involves combining two consolidation loans into a single Direct Consolidation Loan, your PSLF credit could drop further based on the loan mix and payment histories.

You might be wondering: Wouldn’t it be smarter to refinance at a lower interest rate?

Refinancing can lower your interest rate, but for Parent PLUS borrowers, the real issue often isn’t the rate—it’s the monthly payment.

When you refinance:

• You give up federal protections like income-driven repayment and loan forgiveness options.

• Payments stay fixed. If your income drops later (like during retirement), you may struggle to afford the private loan payment.

• Long-term risk: Some borrowers end up tapping into retirement savings or home equity—or even facing bankruptcy—when they can’t keep up with private loan payments.

Double consolidation keeps your loans federal, lowers payments based on income, and maintains eligibility for forgiveness programs like PSLF (10 years) and IDR forgiveness (after 20-25 years). It’s designed for lasting affordability, not just a short-term rate reduction.

Parent PLUS Loans can be overwhelming, especially if you miss the double consolidation deadline. Without it, you might be left with payments that stretch your budget.

The process is time-consuming, and errors could mean losing access to more affordable income-driven repayment plans.

If you don’t know where to start or are worried about making mistakes, my team and I have successfully helped many families manage this process and unlock the best repayment options.

Book a call with us today to get started.

Additional Resources

• Create Your FSA ID – Set up your login to access federal loan services.

• Review Your Federal Loans on StudentAid.gov – Check your loan types and balances.

• Download the Paper Consolidation Application – Use this form for the first round of double consolidation.

• Start Your Consolidation Application Online – Submit your second round of consolidation after completing the first round.

• Loan Codes and Paper Application Instructions – Understand the codes and how to fill out the forms correctly.

• Apply for Income-Driven Repayment (Paper Form) – Lower your payments based on your income.

• Estimate Your Payments with the Parent PLUS Loan Calculator – See how different plans could affect your monthly payment.

Related reading:

• Reddit Questions and Answers on Double Consolidation Loophole

• Can’t Pay Parent PLUS Loans? 6 Solutions to Take Control

• Can Parent PLUS Loans Be Consolidated With Student Loans?

• Benefits and Drawbacks of Consolidating Parent PLUS Loans