Guidance altered to eliminate some student loans from eligibility

As the Department of Education finalizes preparations to launch debt relief applications, the Biden administration has changed its guidance to exclude certain student loans from eligibility for forgiveness. This is a significant reversal as the Department of Education prepares to launch debt relief applications.

The Education Department has announced that as of Thursday, borrowers with student loans through the Federal Family Education Loan (FFEL) program and Perkins Loans who have not yet consolidated their debt into direct loans will no longer be able to do so and will no longer be eligible for federal debt relief. Despite being federally guaranteed, many programs are administered by private institutions. FFEL and Perkins Loan borrowers who requested consolidation under the direct loan program before Thursday are still eligible for debt relief.

The Education Department is currently “evaluating whether there are alternate paths to give assistance to borrowers with federal student loans not held by ED, including FFEL Program loans and Perkins Loans, and discussing this with private lenders,” according to the department’s website.

The agency has not provided an explanation for the shift, which occurred on the same day that six states led by the Republican Party sued the Biden administration over student debt relief. The Biden administration is erasing $10,000 in student debt for those earning less than $125,000 or residing in households with an income of less than $250,000, while Pell Grant applicants from less affluent families may have an additional $10,000 wiped out.

The administration’s basis for the debt relief depends on a legislation enacted after September 11, 2001, which the White House claims permits it to act during a national emergency, in this case the COVID-19 epidemic. Plaintiffs in the Republican case reference an interview with CBS News’ “60 Minutes” in which President Biden stated that the pandemic is “over.”

Borrowers may still apply for debt relief, but the administration encourages them to do so by November 15, in order to secure relief prior to January 1, 2023, when they must resume student loan payments. Since the beginning of the epidemic in 2020, they have been exempt from payment.

According to the White House, debt relief applications will be accepted until 2023.

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