As Republican AGs Sue, Biden Admin Quietly Cuts Hundreds of Thousands of Borrowers From Loan Cancellation

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September 30, 2022

On the same day that six Republican state attorneys general sued the Biden administration, the Department of Education quietly changed its website to say that at least 800,000 borrowers are ineligible for President Joe Biden's student loan cancellation scheme.

The department's website said early Thursday morning that "all loans eligible for the student loan pause," including Federal Family Education Loans (FFEL) and Perkins Loans, are eligible for debt cancellation, NPR reported. Only hours later, however, the department surreptitiously edited its site to say that "borrowers with federal student loans not held by [the Education Department] cannot obtain one-time debt relief."

While the federal government guaranteed the FFEL program, private banks issued the loans until the program ended in 2010, making the loans ineligible for relief under the rules change.

The change came as six attorneys general sued the Biden administration to stop the scheme, which critics allege is unconstitutional and will likely jack up already sky-high inflation. The Congressional Budget Office said Monday that the plan will cost about $400 billion, though other reports put the cost closer to $1 trillion. The AGs' complaint specifically mentions FFEL loans, saying that cancellation will directly harm the quasi-governmental loan servicer MOHELA.

An administration official told NPR that the change will not affect all four million borrowers with FFEL loans, saying that borrowers with both FFEL loans and Direct Loans may still qualify. The Education Department site does not say whether a borrower with both kinds of loans may qualify. FFEL and Perkins Loans borrowers who applied for debt cancellation before Thursday still qualify, the site says.

The official told NPR that the change will affect roughly 800,000 borrowers.