The Department of Education quietly updated its eligibility for borrowers who would qualify for student loan forgiveness on Thursday.
The swift change came the same day officials from six Republican-led states sued the Biden administration to block the launch of its student loan forgiveness plan.
According to new guidelines published to the Education Department’s website, some borrowers with federal loans not held by the Education Department no longer qualify for student loan forgiveness by consolidating their loans into the Direct Loan program.
Before the new guidelines were published, the Education Department allowed borrowers who had consolidated privately held student loans into direct loans to apply for loan forgiveness.
It is unclear how many borrowers will be affected by the rule change.
However, borrowers with the following types of federal student loans with an outstanding balance as of June 30, 2022 still qualify for relief:
- William D. Ford Federal Direct Loan (Direct Loan) Program loans
- Federal Family Education Loan (FFEL) Program loans held by the Education Department or in default at a guaranty agency
- Federal Perkins Loan Program loans held by the Education Department
- Defaulted loans (including Education Department-held or commercially serviced Subsidized Stafford, Unsubsidized Stafford, parent PLUS, and graduate PLUS; and Perkins loans held by the Education Department)
Also, “consolidation loans comprised of any FFEL or Perkins loans not held by the Education Department are also eligible, as long as the borrower applied for consolidation before Sept. 29, 2022,” according to the Education Department.
The Congressional Budget Office (CBO), a nonpartisan organization, estimated that Biden’s student loan forgiveness plan to forgive $10,000 in federal loans for most borrowers would cost the government $400 billion.
The Education Department’s analysis stated that the program would cost $30 billion per year and $379 billion over the life of the program.
There is still no exact date when a website will go live for all eligible borrowers to file their loan forgiveness claims. However, the application will be available in October 2022.
Our journalism needs your support. Please subscribe today to NJ.com.
Katherine Rodriguez can be reached at krodriguez@njadvancemedia.com. Have a tip? Tell us at nj.com/tips.
Read More: Student loan forgiveness reversal: Do you still qualify? Here’s what to know