(The Hill) – President Biden’s student loan forgiveness plan was abruptly updated Thursday to exclude borrowers with privately held federal student loans, according to Department of Education guidelines.
Beginning Thursday, borrowers with federal student loans not held by the Department of Education will no longer be eligible for one-time debt relief by consolidating those loans into direct loans, the guidance said.
The department said only borrowers under the Federal Family Education Loan (FFEL) program whose loans are held by the federal government are eligible. The FFEL program, which stopped lending in 2010, was a student loan scheme in which private banks administered the loans but was guaranteed by the federal government.
Borrowers with privately held FFEL program loans and Perkins loans who requested consolidation into the direct loan program before Thursday — when the administration abruptly updated its guidance — remain eligible for a one-time debt relief through the direct loan program.
The Department of Education also said it was “assessing alternative avenues to provide relief to borrowers on federal student loans not held by ED, including FFEL program loans and Perkins loans, and is discussing this with private lenders.”
According to NPR, over 4 million student loan borrowers have FFEL private loans.
Biden’s student loan forgiveness plan is designed to forgive $10,000 of state student loan debt for borrowers earning less than $125,000 and $20,000 for borrowers who have received Pell Grants.
Earlier this week, the Congressional Budget Office (CBO) reported that the plan will cost about $400 billion. It was also projected that 90 percent of income-eligible borrowers will seek debt relief.
The White House dismissed the report, saying it was unlikely that 90 percent of eligible borrowers would use the program.
Biden’s plan also faced the first of his legal challenges this week.
Six Republican-led states filed a lawsuit against the administration Thursday in the U.S. District Court for the Eastern District of Missouri, arguing the proposal was unlawful because there is no law in Congress authorizing the cancellation of student loan debt.
Earlier this week, the public interest corporation Pacific Legal Foundation (PLF) filed a lawsuit against the administration, challenging it by a plaintiff who is currently paying off loans and would be subject to a costly tax if debt was forgiven because he lives in Indiana , one of several states that consider debt forgiveness taxable income.
The White House has cited the Heroes Act to justify the forgiveness program as it urges how it will stand up against legal challenges in court.
The law allows the Department of Education to waive or amend laws or regulations related to student financial assistance programs during war or national emergencies, with the COVID-19 pandemic as a justification for debt relief.
https://www.wane.com/news/these-loans-no-longer-qualify-for-bidens-student-loan-forgiveness-program/ These loans no longer qualify for Biden’s student loan forgiveness program