Consolidating some FFEL and Perkins loans for forgiveness is no longer possible.
The United States Department of Education has abruptly changed how it is implementing President Joe Biden’s student loan forgiveness plan, More than 4 million borrowers might be left with some type of federal loan. (Student Loan Forgiveness)
If you have Federal Family Education Loans (FFELs) or Perkins loans held by private lenders, you will receive $10,000 in loan forgiveness (or $20,000 if you received a Pell Grant) by consolidating your loans into Federal Direct Loans, as per guidance. cannot qualify for. Published Thursday on the Federal Student Aid website.
The change is likely a response to a lawsuit filed Thursday by Nebraska and five other states seeking to block the pardon action of United States President Joe Biden and student loan expert and author Mark Kantrowitz, via email. told me Some states argued that student loan holders and servicers would be harmed by the action, as they would no longer be able to collect interest on those loans or be paid for their services.
The department’s move is a legal maneuver to thwart some states’ objections, Kantrowitz said.
“And this eliminates the legal position of states to file suit because they cannot even demonstrate damages if the FFELP and Perkins loans are not forgiven,” he said.
As of Thursday, the Federal Student Aid website also advised students with privately held FFEL and Perkins loans that they may qualify for forgiveness by actually consolidating.
If you’re wondering whether your student loans can still be forgiven, the Department of Education states that if your loan payments are subject to a federal pandemic pause on payments and interest, they are also eligible for student loan forgiveness.
Whether the difference between those who can still get student loans forgiven and those who can’t lie with the student who holds the loan, Borrowers with direct student loans, all of which are with the government, will still be eligible, as will borrowers with eligible student loans who applied for consolidated student loans before Thursday. FFEL and Perkins borrowers whose student loans are with the government are also still eligible. But as of Thursday, privately held FFEL and Perkins loans are out.
As of the second quarter of 2022, more than 4 million borrowers had private FFEL loans, and about 2.7 million had government FFEL loans. There were about 1.3 million borrowers with Perkins loans combined by both private lenders and the government.
Note: An FFEL loan is a type of federally-backed student loan that the United States government stopped providing in 2010. And Perkins loans, some of which are owed to schools that some borrowers attended, were then phased out in 2018.
It remains to be seen whether some borrowers with private FFEL and Perkins loans may be eligible for forgiveness anyway, and the consolidation route has now been closed.
The United States Department of Education (ED) said in an on-site announcement that it is “assessing whether there are alternative avenues to provide relief to borrowers with federal student loans held by ED, including FFEL program loans and Perkins loans, and the private lenders are discussing it right now.”
“United States Department of Education (ED) Our goal is to provide relief to as many eligible borrowers as possible as quickly and easily as possible, and this will allow us to achieve that goal, while we will also continue to explore additional legally available options to provide relief to borrowers with privately owned FFEL loans and Perkins loans, in which FFEL borrowers can get one-time debt relief without the need to consolidate,” a Department of Education spokesperson said in an email.
Have a question, comment, or story to share? You can reach at foxususa.usa@gmail.com.