The Direct Loans Consolidation Department (Consolidation Department) pays off loans using checks and electronic funds transfer (EFT). For each loan that is paid off, an individual check is mailed to the loan holder using U.S. Mail. If the loan holder is an agency, payment is accomplished through interagency transfers. If the loan holder is an agency that has enrolled in EFT Payoff Services, the Consolidation Department pays off collection costs using EFT.

For agencies and private loan holders participating in Electronic Payoff and Return Funds Services, payoff manifests are posted online concurrent with the release of payments sent through the ACH network or Fedwire. Payoff manifests are a detailed listing of loans being paid off by the Consolidation Department.

Loan holders are required to fully discharge loans upon receipt of the Consolidation Department’s payment and notify borrowers that the loans have been paid in full. If the payment does not satisfy a borrower's account balance, the loan holder is prohibited from billing the borrower and must notify the Consolidation Department of the underpaid amount. The Consolidation Department will work with loan holders to resolve any underpayment or overpayment issues. (See "How do I request an underpayment or return an overpayment?" or "What are the Tolerances for Under and Over Payments?")

For more information, call the Consolidation Department at 1-888-799-2474 between 8:00 AM to 5:00 PM Eastern Time, Monday through Friday.