It's unclear why the department reversed its decision on allowing FFEL borrowers with commercially-held loans to consolidate and then qualify for debt relief.
In a statement to NPR, a department spokesperson says,"Our goal is to provide relief to as many eligible borrowers as quickly and easily as possible, and this will allow us to achieve that goal while we continue to explore additional legally-available options to provide relief to borrowers with privately owned FFEL loans and Perkins loans, including whether FFEL borrowers could receive one-time debt relief without needing to consolidate.
"The consolidation of MOHELA's FFELP loans harms the entity by depriving it of an asset that it currently owns," says the complaint."The consolidation of MOHELA's FFELP loans harms the entity by depriving it of the ongoing interest payments that those loans generate." In response to the lawsuit, Persis Yu, of the Student Borrower Protection Center, says,"FFEL lenders have shown their true colors. Instead of working in the interest of student loan borrowers — their customers — these lenders are holding hostage relief to millions of borrowers in order to keep making a buck off of borrowers suffering."
Changing the policy now, and limiting the number of FFEL borrowers who can conceivably qualify for debt relief, may make these FFEL banks less likely to legally oppose debt relief.