Breaking News
More () »

Education Dept. changes student debt relief guidance, now excludes millions

Borrowers who had taken out Perkins loans and Federal Family Education Loans are affected in the most recent change.
Credit: xymm - stock.adobe.com

WASHINGTON — Guidance on who qualifies for Biden's student loan forgiveness program changed weeks before the application is set to open and will affect eligibility for millions of student loan borrowers. 

Borrowers who had Perkins loans or Federal Family Education Loans are at the center of the most recent change, NPR reported. Federal Family Education Loans, known as FFEL loans, were issued and managed by private banks but were backed by the federal government.

The program ended in 2010, but over 4 million borrowers still have FFEL loans, NPR reported. Before Thursday, the Department of Education told borrowers they could consolidate the loans into federal Direct Loans to qualify under the debt relief program. 

"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," the website says. 

Borrowers who applied to consolidate their FFEL and Perkins Loans into Direct Loans prior to Thursday are still eligible for the one-time debt relief through the Direct Loan program, according to the website.

It is unclear why the department changed its guidance on FFEL loans.

Biden's debt relief program is also facing legal challenges on Thursday after six Republican-led states began filing lawsuits, accusing the program of overstepping its executive powers.

It’s at least the second legal challenge this week to the sweeping proposal laid out by President Joe Biden in late August, when he said his administration would cancel up to $20,000 in education debt for huge numbers of borrowers. The announcement, after months of internal deliberations and pressure from liberal activists, became immediate political fodder ahead of the November midterms while fueling arguments from conservatives about legality.

The Education Department is still on track to unveil the application for the forgiveness plan in early October, and it sent an email to borrowers Thursday explaining how to prepare to apply. The email noted that applicants do not have to submit any supporting documents.


Before You Leave, Check This Out