Student Loan Forgiveness: Are FFEL Loans Eligible?
President Joe Biden on August 24 announced the administration’s long-awaited plan for loan forgiveness. But while the plan has been widely welcomed, details are scarce, leaving borrowers with many questions, including about Federal Family Education Loans (FFEL), as the government said it was “assessing whether there was a need to expand eligibility to borrowers with private federal student loans, including FFEL.”
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Under the plan, there will be up to $10,000 in federal student debt relief for most borrowers, up to $20,000 for Pell Grant recipients, as well as an extended break payment “one last time” through Dec. 31, according to a White House fact sheet.
As to whether FFEL loans are eligible, the answer is “maybe”.
If your FFEL loans were eligible for the student loan payment break – which has been in effect since March 2020 – borrowers may qualify for a discount, according to an FAQ page on the Department for Education website.
Under the question “Are Federal Home Education Loans (FFEL) or Perkins loans eligible for debt relief?” says the Department. “It depends. All loans eligible for student loan suspension are also eligible for relief, including loans held by ED and guarantor agencies. ED is assessing whether to extend eligibility to borrowers with private federal student loans, including FFEL and Perkins loans.
In the meantime, borrowers with private federal student loans, such as the FFEL, Perkins, and HEAL programs, can take advantage of this relief by consolidating those loans into the Direct Lending Program.
The department adds that FFEL Joint Consolidation Loans, often referred to as Spouse Consolidation Loans, are not eligible for consolidation into the Direct Lending Program under current law.
The New York Times reports that the Department of Education intends to make cancellation available to anyone with ineligible FFEL loans, but it will take some time.
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The Department of Education explains that the FFEL program was a program that worked with private lenders to provide federally guaranteed student loans and ended in 2010. “All loans are now made through the William D. Ford Federal Direct Loan Program,” the department states on its website.
CNBC reports that nearly 10 million people still hold FFEL loans.
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