Student Loan Update

On Sept. 29, the U.S. Department of Education quietly rolled back the amount of student loan debt eligible for forgiveness.  

Borrowers with privately owned federal student loans are no longer eligible for debt relief. These include Perkins loans and Federal Family Education Loans.  

Perkins Loans are low interest, subsidized loans from the Federal Direct Student Loan Program. FFEL loans  one of the first federal student loan programs in the nation, ended in 2010. The program worked with private lenders to distribute federally subsidized and guaranteed loans. 

This change follows a lawsuit filed by GOP attorneys from Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina. According to Politico, the six states asked a federal judge to overturn the debt relief program.  

The complaint for this lawsuit calls mass debt cancellation “the epitome of unlawful and arbitrary agency action.” Citing the steep increase in grocery prices between Aug. 2021 and Aug. 2022, the lawsuit claims that instead of helping the poor and working class during economic inflation, President Joe Biden is choosing to “give [the well-off] up to $20,000.” 

Only those who make less than $125,000 annually, or married couples filing jointly who make less than $250,000, are eligible for debt relief.  

Thursday’s change will reportedly exclude 800,000 borrowers from relief. Other borrowers who are still eligible will now get less relief than they originally expected. Roughly 1.5 million FFEL borrowers also have Direct Loans, which are still eligible for forgiveness.  

The Education Department “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.” 

Borrowers must apply for forgiveness before Monday, Oct. 31.