U.S. Education Secretary Miguel Cardona appeared alongside President Biden when he announced his student loan relief plan on Aug. 24. On Thursday, the administration quietly changed its guidance around which borrowers qualify for this relief.In a remarkable reversal that will affect the fortunes of many student loan borrowers, the U.S. Department of Education has quietly changed its guidance around who qualifies for President Biden's sweeping student debt relief plan.
Today, according to federal data, more than 4 million borrowers still have commercially-held FFEL loans. Until Thursday, the department's own website advised these borrowers that they could consolidate these loans into federal Direct Loans and thereby qualify for relief under Biden's debt cancellation program.A screenshot of the U.S. Education Department's original student loan relief guidance for holders of FFEL and Perkins Loans, taken at 10:16 a.m. on Thursday.
An administration official tells NPR this change will not affect all 4 million borrowers with commercially-held FFEL loans. The official said many FFEL borrowers also have Direct Loans and so can still qualify to consolidate those FFEL loans, though that detail was not included in the department's updated guidance.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.
When FFEL borrowers consolidate their old loans into federal Direct Loans, these private banks essentially lose business. If these banks' financial health depends, at least in part, on the assumption that they would be holding and profiting from these debts over the long-term, then losing borrowers to Biden's debt relief plan could, possibly, constitute harm.filed Thursday by six state attorneys general, makes this very argument.
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