The Biden administration has changed its guidance to eliminate some student loans from eligibility for forgiveness, a major reversal as the Department of Education makes final preparations to launch debt relief applications.
As of Thursday, borrowers with student loans through the Federal Family Education Loan (FFEL) program and Perkins Loans who have not already consolidated their debt into direct loans will now no longer be able to do so and are no longer eligible for federal debt relief, the Education Department now says. Those programs, though federally guaranteed, are held by private institutions. Borrowers with FFEL and Perkins Loans who applied to consolidate in the direct loan program before Thursday are still eligible for debt relief.
At this point, the Education Department “is assessing whether there are alternative pathways to provide relief to borrowers with federal student loans not held by ED, including FFEL Program loans and Perkins Loans, and is discussing this with private lenders,” the department says on its website.
The department hasn’t explained the reason for the change, which came the same day that six GOP-led states sued the Biden administration over the student debt relief. The Biden administration is canceling $10,000 in student debt for those earning less than $125,000 or households with less than $250,000 in income, while Pell Grant recipients, who come from less affluent families, may have an additional $10,000 forgiven.
The administration’s justification for the debt relief hinges on a post-Sept. 11, 2001, law that the White House says allows it to act during a time of a national emergency, which in this case was the COVID-19 pandemic. The plaintiffs in the GOP lawsuit cite a CBS News “60 Minutes” interview in which President Biden said the pandemic is “over.”
Borrowers may apply for the debt relief yet, but the administration is encouraging them to apply by Nov. 15, so that they can obtain relief ahead of Jan. 1, 2023, when borrowers will be required to resume student loan payments. They haven’t had to make a payment since the beginning of the pandemic in 2020.
According to the White House, borrowers will still be able to apply for debt relief into 2023.
