A graduate student calling herself “April Vendetta” protests student debt at New York’s Washington Square Park on May 19, 2021, following the virtual opening ceremony of New York University.
Timothy A. Clary | AFP | beautiful pictures
Under new guidance from the U.S. Department of Education, federal student loan borrowers will no longer be able to merge to qualify for President Joe Biden’s student loan forgiveness program.
An update on the Department of Education guidance for one-time student loan forgiveness is a similarity to previous guidelines, which said such borrowers can aggregate student loans. them with the Director’s Loan to qualify for the reduction.
Biden announced plans to forgive student debt in August. That includes a forgiveness of up to $10,000 for federal student loan borrowers and up to $20,000 in relief for Pell grant recipients. To qualify, borrowers must be below certain income thresholds – $125,000 for individuals and $250,000 for households.
However, the announcement of the plan immediately ask questions about whether borrowers with the Federal Family Education Loan Program, or FFEL, non-government held loans will also be eligible.
At that time, the Department of Education was supposedly exploring strategies to allow “forgotten borrowers”, who are estimated to total around 5 million, not to be excluded from the forgiveness. Holders of commercially held FFEL loans have been excluded from the federal student loan moratorium that has been in place throughout the pandemic.
In one update to its websiteThe Department of Education now states, “Consolidation loans including any FFEL or Perkins loans not held by the ED are also eligible, as long as the borrower applies for consolidation by September 29, 2022. “
Student loan experts and borrowers were quick to express their shock when news of the policy change was posted on social media on Thursday.
“As recently as yesterday, the website said it was working to find a solution for these borrowers,” said Betsy Mayotte, president of the Student Loan Counseling Institute, tweeted. “This is a gut punch, to say the least.”
The Department of Education is evaluating whether there are alternative avenues to assist borrowers with federal student loans that are not held by the ED, including FFEL Program loans and Perkins Loans. or not, and are discussing the matter with private lenders,” the website states.