A change to the fine print of President Joe Biden’s student debt cancellation plan could mean fewer Idaho borrowers qualify for relief the administration announced in August.
The change affects more than 4 million student borrowers nationwide, with federal family education loans issued and managed by private banks but ultimately backed by the federal government.
After a recent decision by the US Department of Education to change its guidelines, NPR reports that about 800,000 of those borrowers will now be barred of the student debt relief program. The statesman reached out to the Department of Education for clarification on the numbers from NPR, but did not receive a response as of press time.
Randi Croyle, director of student financial aid services at the University of Idaho, told the Idaho Statesman that she thinks many Idahoans may have avoided being left out of loan forgiveness, but it is not a certainty.
Here’s what to know about the change, including how to check if your loans are now exempt from student debt forgiveness.
What types of student loans are eligible for forgiveness?
Until recently, the U.S. Department of Education advised borrowers with corporate-held FFELP loans that they could consolidate their loans into direct federal loans — the funds of which come not from private banks but from the government.
That would make those borrowers eligible for relief under Biden’s plan since the government owns the loans. But the department changed this language on September 29 fine-tuning the wording of the Ministry of Education website to say instead: “borrowers with federal student loans not held by ED cannot obtain one-time debt relief by consolidating these loans into direct loans”.
It is not entirely clear why the Biden administration made this decision, but according to some legal experts, it is a decision of avoid lawsuits from banks who might argue that the debt cancellation plan hurt them.
Are Idaho Student Borrowers Affected?
The FFEL program has been withdrawn since 2010 and there have been no new loans of this type since then. Additionally, according to Croyle, the University of Idaho, which has a 43% alum rate from Idahomoved to the direct lending program through the federal government in the 1990s.
“Most borrowers who borrowed in the ’90s probably repaid their loans, and that wouldn’t be much of a problem for the student,” Croyle said. “That being said, if they had consolidated their loans, most consolidation programs are done through the Department of Education and under the DL program, so I don’t see that having much impact. here.”
Borrowers who consolidated their loans into Federal Direct Loans before the change was made on Sept. 29 will still be eligible for the forgiveness, based on their income and other requirements set out in the Biden administration’s plan.
Croyle added that she wasn’t sure what kind of loans other schools in Idaho use, but direct loans are the most commonly used these days. Boise State University, the state’s largest institution of higher learning, offers federally subsidized student loans directly from the United States Department of Education.
For those caught up in the change in the Biden administration and no longer eligible for student loan forgiveness, Croyle offered other alternatives.
The Civil Service Loan Cancellation Program forgive the remaining balance on your loans after making 120 eligible monthly payments and working full-time for an eligible employer. There is also teacher and military loan forgiveness programs for those who qualify.
How do you know if your student loans are privately held?
Borrowers can go online to studentaid.gov and log in to check the status of their loans. If your loan does not appear on the federal site, it means that the loans are private.
You can also check via the National Student Loan Data System.