President Signs Bill Repealing Single-Holder Rule

Federal education-loan borrowers now may consolidate their loans with any authorized consolidation lender. President Bush has signed into law an emergency funding bill that includes a provision repealing the so-called single-holder rule.

Previously, borrowers whose loans were held by a single entity had to request a consolidation loan from that entity. Effective with consolidation-loan applications received beginning June 15, 2006, borrowers may consolidate their loans with any consolidation lender, regardless of the holders of their current loans.

The measure also includes language restoring the previous standard for Federal Family Education Loan Program borrowers to obtain Direct Consolidation loans if the borrower is unable to obtain a FFELP consolidation loan with income-sensitive-repayment terms acceptable to the borrower. That standard had been tightened by the Higher Education Reconciliation Act.

The two student-loan provisions were tucked in a $94.5-billion emergency funding bill whose primary purpose is funding the war on terror, providing relief to the victims of last year’s hurricanes, enhancing border security, and preparing for bird flu.

The measure also provides $50 million in funds to help pay the expenses of postsecondary institutions that were forced to close, relocate or significantly curtail activities as a result of last year’s hurricanes.