The Biden administration will no longer offer loan forgiveness to borrowers with privately held federal student loans as a part of its new student debt relief program, the Education Department said in updated guidance on Thursday.
Student loan borrowers are near the White House.
The Department of Education said on its website that it is still looking for alternative pathways to include the group in debt forgiveness despite the fact that the student loan forgiveness plan no longer applies to millions of Americans.
The administration had previously said those borrowers would be able to receive up to $10,000 in forgiveness.
The Department of Education had previously stated that Americans who borrowed through the Federal Family Education Loan program would be eligible for Biden's debt cancellation.
More than four million people hold this type of loan, a small portion of 45 million Americans who have federal loans.
Those with privately held FFEL loans who applied to consolidate their loans into direct loans held by the Education Department before Thursday will be eligible for one-time debt relief according to the Department of Education.
The administration is exploring legal options to give relief to borrowers with privately owned FFEL loans.
A lot of people. Half of FFEL student loans are held by the Department of Education and the other half by commercial lenders according to the Student Borrower Protection Center. The private loans are owned by companies.
According to legal experts, the change to the student loan program was made to avoid lawsuits from banks that would challenge the debt relief because of lost business.
There are several legal challenges to the student debt relief program of the Biden administration. A lawyer from a conservative law firm in Indiana asked the government to block the policy because it would force him to pay $1,000 in taxes. A group of six GOP-led states filed a lawsuit in federal court on Thursday arguing that the administration does not have the authority to cancel loans. The student loan plan is too expensive and unfair for those who have already paid their loans according to several Republicans.
The Education Dept. is no longer including millions from student loan relief.
Student debt relief is being scaled back by the Biden administration.
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