'Remarkable reversal': President Biden just (quietly) scaled back student loan f...

The Department of Education reversed course last week by quietly scaling back on eligibility for President Biden’s student loan forgiveness plan.

Borrowers with certain loans issued and managed by private lenders but guaranteed by the government now will not be able to receive relief under the new guidelines, which were updated on the department’s website at the end of September.

This "remarkable reversal," as NPR put it, could affect hundreds of thousands of borrowers. And with legal disputes being launched, the future of forgiveness seems less certain than when it was announced six weeks ago.

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Hundreds of thousands of borrowers will be affected

Biden’s student loan forgiveness plan made waves when it was first announced in August, with the promise that billions of dollars were about to be wiped from student loan records.

The department’s website originally stated that borrowers with privately held federal student loans, such as through the Federal Family Education Loan (FFEL) and Perkins programs, could receive relief by consolidating these loans into the Direct Loan program.

However, the guidance now specifies, that consolidation loans comprised of any FFEL or Perkins loans that aren’t held by the Education Department are only eligible for forgiveness if the borrower applied for consolidation before Sept. 29, 2022.

The FFEL program was shuttered in 2010, but an administration official told NPR about 800,000 borrowers would now be excluded from relief.

And even more people could be affected by receiving less relief as there are 1.5 million borrowers who have both Direct Loans (which do qualify for cancellation) and FFEL loans.

What could have triggered the reversal?

While the Department of Education (ED) made no explanation for narrowing the eligibility requirements on its website, a spokesperson provided NPR with a statement declaring its goal was to “provide relief to as many eligible borrowers as quickly and easily as possible.”