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Private student loans are no longer eligible for the Biden debt relief plan

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The Biden administration on Thursday reversed course on part of its student debt forgiveness plan and will no longer forgive private federal student loans, according to an updated document Information sheet of the Department of Education.

The change will apply to some borrowers who have federal family education loans or loans under the Federal Perkins Loan Program, programs that the Department of Education has discontinued in recent years. About 10 million borrowers still hold the collective $248 billion in FFEL debtdespite the fact that the program stopped issuing loans in 2010. About 2 million people still hold about $6 billion in the Perkins loan program, which was closed in 2017.

Previously, borrowers with such loans could apply to consolidate them to qualify for up to $20,000 in loan forgiveness under the Biden administration’s plan.

Now, however, “borrowers with federal student loans are exempt [the Education Department] cannot receive one-time debt relief by consolidating these loans into direct loans,” the Ministry of Education website notes. The change does not apply to borrowers who requested to consolidate their loans before September 29.

An Education Department spokesman said the update will allow the administration to provide relief to as many borrowers as possible as quickly as possible while exploring legal options for FFEL and Perkins loan holders.

Also on Thursday, six Republican-controlled states sued against the Biden administration’s student loan forgiveness plan. The administration also faced a lawsuit from an Indiana attorney who says the plan will hurt him financially because he has to pay taxes on the debt. (Ministry of Justice specified anyone who wants to opt out can do so.)

“The president and his administration are legitimately giving working and middle-class families a breather as they recover from the pandemic and prepare to resume loan payments in January,” White House press secretary Abdullah Hassan said in a preliminary statement to Bloomberg News. .

On Thursday, the White House also released guidance for borrowers waiting to apply for student debt forgiveness in October. Borrowers will not need to upload additional documents, in a Twitter threadand they will have until December 2023 to apply for aid.

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