These two types of student loans are not eligible for forgiveness, new guidance says

The Biden administration has changed its guidance to remove some student loans from eligibility for forgiveness, a major reversal as the Education Department makes final preparations to launch applications for debt relief.

Beginning Thursday, borrowers with student loans through the Federal Family Education Loan (FFEL) program and Perkins Loans who have not already consolidated their debt into Direct Loans will now no longer be able to do so and will no longer be eligible for federal debt relief , says the Board of Education now. These programs, although federally guaranteed, are run by private institutions. Borrowers with FFEL and Perkins loans who applied to consolidate into the Direct Loan Program by Thursday are still eligible for debt relief.

At this time, “the Department of Education is evaluating whether there are alternative avenues to provide relief to borrowers with federal student loans not held by ED, including FFEL program loans and Perkins loans, and is discussing this with private lenders,” the department says. its website.

The department has not explained the reason for the change, which came on the same day six GOP-led states sued the Biden administration over the student debt restructuring. The Biden administration cancels $10,000 in student debt for those earning less than $125,000 or households with less than $250,000 in income, while Pell Grant recipients who come from less affluent families can have an additional $10,000 forgiven.

The administration’s rationale for debt relief hinges on a post-Sept. 11, 2001, law that the White House says allows it to act during a time of national emergency, which in this case was the COVID-19 pandemic. The plaintiffs in the GOP suit cite a CBS News “60 Minutes” interview where President Biden said the pandemic is “over”.

Borrowers can still apply for debt relief, but the administration is urging them to apply by Nov. 15 so they can get relief by Jan. 1, 2023, when borrowers must resume making student loan payments. They have not had to pay since the beginning of the pandemic in 2020.

According to the White House, borrowers will still be able to apply for debt restructuring into 2023.

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