On the same day that six Republican-led states filed a lawsuit against President Joe Biden, alleging his student debt forgiveness scheme is unlawful, the Biden administration discreetly updated its student loan forgiveness plan, severely reducing eligibility.
As of this Thursday, borrowers with federal student loans that are not held by the U.S. Department of Education won’t be eligible for the assistance program anymore.
As long as the borrower consolidated their debt into the federal Direct Loan program, the administration had previously stated that borrowers with student loans owned by private entities, many of which were made under the former Federal Family Education Loan (FFEL) program and Federal Perkins Loan program, would be eligible for relief of up to $10,000 or $20,000 in loan forgiveness.
According to the updated guidelines, “As of Sept. 29, 2022, borrowers with federal student loans not held by ED cannot obtain one-time debt relief by consolidating those loans into Direct Loans.”
According to NPR, the FFEL Program has privately held loans for more than 4 million borrowers of student loans.
“Our goal is to provide relief to as many eligible borrowers as quickly and easily as possible, and this will allow us to achieve that goal while we continue to explore additional legally-available options to provide relief to borrowers with privately owned FFEL loans and Perkins loans, including whether FFEL borrowers could receive one-time debt relief without needing to consolidate.”
For those making less than $125,000 annually or married couples making less than $250,000 annually, Biden said in August that he would forgive up to $20,000 of federally held student debt in 2020 or 2021.