Student loan debt relief is coming down. Who is affected?

The Biden administration reined in its pledge to forgive up to $20,000 in federal student loans on Thursday, limiting the types of loans eligible for relief.

The basic outlines of the offer remain the same. Borrowers with incomes of less than $125,000 (or $250,000 for a couple) can qualify for debt forgiveness of up to $10,000 on their federal direct student loans. The relief amount increases to $20,000 for borrowers who meet the income threshold and receive a Pell grant — a form of aid aimed at the neediest applicants — while an undergraduate.

What has changed is the treatment of loans guaranteed by the federal government but held by private lenders. This includes at least some of the loans issued through the Federal Family Education Loan, Federal Perkins Loan, and Health Education Assistance Loan programs.

Initially, the administration said qualified borrowers with these private loans could consolidate them into a federal direct loan and receive debt relief. On Thursday, however, the ministry’s website said that to get relief, borrowers had to have applied for a consolidation loan by September 29.

The Department of Education is “evaluating whether there are alternative ways to provide relief to borrowers with federal student loans that are not held by ED, including FFEL program loans and Perkins loans, and is discussing this with private lenders,” the website says.

Some FFEL and Perkins loans are held by the Department of Education, so they remain eligible for general forgiveness if borrowers meet income limits. But in the case of many older loans, borrowers may not know whether they’re federal or private because they weren’t given a choice by their college, said Abby Safroth, director of the student loan borrower assistance program at National Consumer Law. Centre.

To find out if your FFEL or Perkins loans could qualify for forgiveness, go to your account on the Federal Student Aid website ( and call the “My Loan Servicers” list. If the servicer’s name is preceded by “DEPT OF ED,” that loan belongs to the federal government.

According to the department’s latest statistics, 10.7 million people have outstanding FFEL and Perkins loans. More than 5 million of these loans are held by the Department of Education.

Of the remaining privately owned but federally guaranteed loans, only a portion of borrowers would meet the income thresholds for general loan forgiveness. An administration source told National Public Radio that about 800,000 people will be affected by the policy change regarding consolidated loans.

The change was reported on the same day that six Republican-controlled states filed a lawsuit to block blanket debt relief, arguing that the government did not have the authority to wipe out student loan balances. The lawsuit argues that the relief would harm the states because they operate or invest in lenders that make student loans.

By cutting the ability to qualify for forgiveness by consolidating private FFELs, Perkins loans and HEALs into a direct loan, the administration reduces the loss of future earnings for lenders and servicers. That won’t end the states’ lawsuit, however, or an earlier challenge brought by the Pacific Legal Foundation, which describes itself as a libertarian public interest law firm.

About the Times Utility Journalism Team

This article is from the Times’ Utility Journalism Team. Our mission is to make a difference in the lives of Southern Californians by publishing information that solves problems, answers questions and helps make decisions. We serve audiences in and around Los Angeles — including current Times subscribers and diverse communities that have historically not had their needs met by our coverage.

How can we be of service to you and your community? Email utility (at) or to one of our reporters: Matt Ballinger, Jon Healey, Ada Tseng, Jessica Roy and Karen Garcia.

Leave a Reply

Your email address will not be published. Required fields are marked *