Some borrowers with privately held federal student loans will no longer be eligible for debt relief unless they filed for consolidation before September 29, 2022.
Millions of federal student borrowers will soon be able to apply for debt relief under a Biden administration program.
Borrowers are eligible for up to $10,000 in student loan forgiveness under the plan if their 2021 or 2020 income was less than $125,000 for individuals or $250,000 for couples. Those who received a Pell Grant in college and meet the same income thresholds can receive up to $20,000 in relief.
But as the application launch approaches, some persons on social media are assert that the Department of Education made changes to the program, excluding some borrowers who were previously eligible for relief. Google Trends data also shows that people are looking for information about a “Reversal of Student Loan Forgiveness.”
More from VERIFY: Fast facts on student loan forgiveness
Has the Biden administration changed the student loan forgiveness plan that excludes some borrowers from relief?
Yes, the Biden administration made a change to the student loan forgiveness schedule that excludes some borrowers from relief.
Borrowers with federal student loans not held by the Department of Education are now ineligible for debt forgiveness if they have not applied for consolidation before September 29, 2022, the department said.
WHAT WE FOUND
Some borrowers with federal student loans held by private lenders are now ineligible for Biden administration debt relief if they have not already applied for it consolidationwhich allows federal student loan borrowers to combine multiple loans into one.
“As of September 29, 2022, borrowers on federal student loans not held by ED cannot receive one-time debt relief by consolidating those loans into direct loans.” The Department of Education’s student loan forgiveness website states.
This includes borrowers with Federal Family Education Loan (FFEL) program and Perkins loans not held by the Department of Education. When these borrowers applied to consolidate their loans with the Federal Ministry of Education direct loan program before September 29, 2022, they will still be eligible for student loan forgiveness.
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The exclusion of FFEL and Perkins borrowers who have not requested consolidation of their loans is a reversal of language previously featured on the department’s website.
An archived website dated September 27, 2022 shows the department said borrowers with privately held federal student loans could receive relief “by consolidating those loans into the direct loan program.” Those borrowers, along with others who have student loan debt, would have to file an application for relief by December 31, 2023, the website previously said.
But with the recent update, those borrowers with loans held by private lenders who have not consolidated them are no longer eligible for relief under Biden’s plan. However, the department said it is “still evaluating and discussing with private lenders whether there are alternative avenues to provide relief to borrowers on federal student loans not held by ED, including the FFEL program and Perkins loans.” .
The latest available federal data shows that just over 4 million borrowers have student loans that are not held by the Department of Education, Jessica Thompson, vice president of the Institute for College Access and Success, told VERIFY. Biden’s administration and Department of Education officials did not answer questions about how many borrowers the recent plan change would affect.
No other student loan borrowers have been excluded from forgiveness since the department’s last update, Thompson confirmed.
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When VERIFY asked the department why it is now excluding FFEL and Perkins borrowers from the Biden administration’s student loan forgiveness plan, a spokesman said its goal is “to bring relief to as many eligible borrowers as quickly and easily as possible, and this will allow us to achieve this goal while we continue to evaluate additional legally available options to provide relief to borrowers with FFEL privately held loans and Perkins loans, including whether FFEL borrowers could receive a one-time debt forgiveness, without having to consolidate.”
Thompson believes the Department of Education’s statement made it clear that “it is concerned about legal challenge from private companies holding these loans.” That’s because the Department of Education would provide a “very strong incentive for borrowers to consolidate and thus downsize their portfolios — which means a loss of borrowers and therefore revenue,” she added.
This comes out recently as six states filed a federal lawsuit on the Biden administration’s student loan forgiveness program and called for an immediate injunction to suspend the program.
How to Check if You Have Federal Private Student Loans
People who are unsure whether their loans are being held by the Department of Education can check by registering with their Federal Student Aid (FSA) account. and select “My Help” from the drop-down menu under their name. In the Loan Breakdown section, you will see a list of all the loans you have received.
If you expand View Loans and select the View Loan Details arrow next to the loan, you will see the more detailed names for your loans.
The name of your service provider starts with “Dept. of Ed” or “Default Management Collection System” if your loans are held by the Department of Education. Servicer names are also visible in the My Help section.
More from VERIFY: Yes, some federal student loan borrowers are required to apply for debt relief
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