In a major defeat for the Biden Administration’s ongoing student debt relief program, one Department of Education official announced Thursday that those individuals holding private-owned debt that is backed by the Federal government are no longer eligible for the loan forgiveness program launched last month. The number of individuals impacted is disputed, but represents at least 770,000 American borrowers, according to the estimate cited by the official.

The adjustment in question comes nearly 35 days after the Biden Administration announced the most ambitious student debt relief program in American history. The federal program in question entails an unconditional debt forgiveness of $10,000 for all public borrowers (92 % of all individuals with any student debt), and up to $20,000 for Pell Grant recipients. Only those earning below $125,000 annually (95 % of income earners) are eligible. Furthermore, only around 8 million people received an immediate and automatic relief via the program with the remainder required to apply online before December 30, 2023.

Unfortunately, this deadline proved much shorter for those with debts older than 12 years. According to Thursday’s announcement, those individuals still holding the debt accrued under Federal Family Education Loans and Perkins programs can no longer qualify for the relief. Both these programs represent a now-rare form of student lending, in which the Federal government guarantees profitable payment on loans advanced to the consumer by private, corporate lenders.

The Federal Family Education Loans expired on June 30, 2010. The vast majority of the remaining debt has already been paid off by the borrowers, but a significant amount of the original still remains for a variety of reasons. Some final payments might have survived due to the pause on payments with inception of the COVID-19 pandemic, while others might have been delayed due to other deferments or forbearances.

The number of people impacted was estimated to be around 770,000 Americans by the Department of Education in its official statement. However, this figure is disputed by expert Mark Kantrowitz, who is also the author of “How to Appeal for More Financial Aid”, who spoke about the measure with the Detroit Free Press. According to Kantrowitz, the real figure could be as high as four million people, based on previous data he retrieved from the FSA Data Centre.

He acknowledges that some of the cuts made by the DoE to arrive at their estimates might have actually taken place. For instance, many of the now non-eligible borrowers might have applied and received forgiveness before the September 29 change was announced. Similarly, a significant number of the four million already did not qualify due to their income levels. However, Kantrowitz expressed serious doubt that these cuts were large enough to leave only 770,000 borrowers today.

The change came in the aftermath of a powerful lawsuit by six Republican-led states, which targeted the legality of the debt forgiveness program as a whole and in many of its more drastic aspects. As a compromise, the Biden Administration decided to drop the eligibility of those holding the aforementioned debt. This might help salvage the program for the tens of millions of other beneficiaries, but it nonetheless leaves behind at least hundreds of thousands of voters, many in desperate need of such relief.

Anthony Tilghman

Anthony Tilghman, is an 2x Award-winning Photojournalist, Education advocate, Mentor, and Published Author with years of experience in media, photography, marketing and branding. He is the Winner of the...

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