In October of 2011, President Obama announced a new student loan initiative aimed at helping student borrowers better manage their debts. One piece of this initiative was the creation of a new type of federal consolidation loan, called a Special Direct Consolidation loan.

The Special Direct Consolidation loan’s main benefit is a very modest (fraction of a percentile) interest rate reduction. The eligibility requirements are, in my opinion, rather silly: you have to have at least one Direct federal loan and one FFEL loan, but only FFEL loans can be included in a Special Direct Consolidation loan. So if you’re looking to consolidate all of your federal student loans and you have a mix of Direct, FFEL, and other federal loans, your non-FFEL loans will have to be consolidated separately via a different process. Because of that, and because the benefits of the “Special” consolidation loan are modest (at best), a lot of borrowers have concluded that the Special Direct Consolidation loan is not really all that “special,” and I tend to agree.

That said, for borrowers who meet the eligibility criteria and want to take advantage of the interest rate incentive, time is running out. The Special Direct Consolidation loan is only available until June 30, 2012, so it’s now or never. To read more about the Special Direct consolidation loan, click here.