Thousands learn they don’t qualify for President Biden’s student loan debt relief

Some who were told they qualified for relief are learning that’s no longer the case.
Published: Oct. 18, 2022 at 9:27 PM MST
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PHOENIX (3TV/CBS 5) - Applications are open, and more than eight million Americans have already applied for student loan forgiveness. But not everyone makes the cut. Some who were told they qualified for relief are learning that’s no longer the case.

These are the hundreds of thousands of people with FFELP, the federal family education loan program. These are federal loans that are issued and managed by private banks. They were available to people getting student loans before 2010, and now that group of borrowers is finding themselves out of luck. “Typically these people are well over 35 and many of them are over the age of 50,” said Alan Collinge, founder of Student Loan Justice. “They are essentially out of luck for the Biden loan cancellation there is no doubt.”

President Biden’s student loan relief program could cancel as much as $20,000 in student loans for borrowers. So those with FFEL were under the impression they would qualify. But Collinge says mixed messages from the Department of Education led to confusion for many. “Borrowers could have consolidated into the direct program,” Collinge said.

Initially, the department of education had encouraged those specific borrowers who did not want to consolidate to sit tight and wait for direction. But according to the institute of student loan advisors, the feds changed their website on Sept. 29, the same day they said consolidation was no longer an option.

For those FFEL borrowers that consolidated their loan before Sept. 29, they will qualify. For every other borrower right now, they do not. “The FFELP borrowers have been essentially betrayed and abandoned by the president and congress,” Collinge said.

The education department has said the administration is looking into ways to provide relief for those borrowers and is discussing options with private lenders. “Unfortunately, by executive order the President can’t just cancel the loans because they are held privately. The government and taxpayers would have to actually buy the loan from the loan holders in order to cancel it and that gets pretty expensive,” Collinge said.

Some politicians are against the loan forgiveness program as a whole. Arizona Attorney General Mark Brnovich recently filed a lawsuit with other states to block the new student loan forgiveness program, arguing the administration is exceeding its authority.