The guidance for President Biden’s provision of up to $10,000 in debt relief for current student loan holders has been revised by the U.S. Department of Education. Under the revised guidance, privately held federal student loans (i.e., the old Federal Family Education Loan or FFEL program) are not eligible for the $10,000 in forgiveness. This is expected to affect only a small number of borrowers, as the FFEL program has not issued loans since 2010.
The change is believed to be a response to opposition to the President’s debt relief proposal. While FFEL loans are guaranteed by the federal government, they are managed by private or state-based entities. Recently, six states filed a
lawsuit alleging economic harm from the debt relief. The Education Department says it is exploring “additional legally-available options to provide relief to borrowers with privately owned FFEL loans and Perkins loans...” However, the change in conditions does not affect the ability of borrowers holding Direct Loan from securing debt relief from these loans. For more on the President’s debt relief plan, click
here.
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