Under President Biden’s student loan forgiveness program, individual borrowers who earned less than $125,000 in 2020 or 2021 will see up to $10,000 or $20,000 of their federal student loan debt forgiven. As of Sept. 29, 2022, some loans may no longer qualify.
According to new guidance from the Education Department, it will no longer allow borrowers who have federal student loans that are owned by private entities to qualify for loan forgiveness, CNBC reported. Borrowers will also no longer be able to consolidate their loans to qualify for forgiveness.
CNBC also noted that borrowers with FFEL or Perkins loans not held by the Education Department can only qualify if they applied for consolidation before Sept. 29.
An administration official stated that roughly 770,000 will be affected by this policy change.
Politico reported that while it’s unclear why the Biden administration made this decision, industry officials and policy experts have warned about the legal complexities associated with loan forgiveness. For weeks, top Education Department officials and industry groups have been attempting to strike a deal in which the companies were compensated for their losses to avoid suing the administration.
Politico added that the Education Department said on its website (on Sept. 29) that it “is assessing whether there are alternative pathways to provide relief to borrowers with federal student loans not held by [the Education Department], including FFEL Program loans and Perkins Loans, and is discussing this with private lenders.”
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