With six Republican-led states now suing to stop President Biden's student loan debt relief plan from coming to pass, his administration on Thursday made a quiet, unannounced change to that plan. As CNN reports, about 770,000 borrowers whose federal student loans are guaranteed by the government but are actually held by private lenders won't qualify to have those loans forgiven. CBS News cites them as student loans through the Federal Family Education Loan (FFEL) program and Perkins Loans that have not yet been consolidated into federal Direct Loans. Only those borrowers with FFEL and Perkins Loans who applied to consolidate in the Direct Loan program prior to Thursday can obtain debt relief.
The reversal appears in new guidelines that were published Thursday to the Education Department's website. NBC News notes that when Biden shared his plan in August, the guidance on these types of loans was loose: The Education Department said these loans were still under consideration for inclusion in the student loan debt relief plan, and "in the meantime, borrowers with privately held federal student loans can receive this relief by consolidating these loans into the Direct Loan program." No deadline for doing so was given.
The aforementioned suit was also filed Thursday, by state attorneys general from Missouri, Arkansas, Kansas, Nebraska, and South Carolina, as well as legal representatives from Iowa. CNN explains that the suit does touch on these loans in making the case that Biden's plan gives borrowers an incentive to consolidate FFEL loans, and that those who do so would deprive the current loan owners of the ongoing revenue they would have received from servicing the loans. (More student loans stories.)
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