Some student loans aren’t eligible for relief anymore. How to know if yours still qualify

Evan Vucci/AP

Some federal student loans will no longer qualify for debt relief.

In a reversal of President Joe Biden’s initial plan, the U.S. Department of Education changed guidelines for eligibility on Thursday, Sept. 29, according to their website. Now, only federal loans held by the department will qualify for student loan debt relief.

Some federal student loans, including Perkins Loans and Federal Family Education (FFEL) Program loans, are held by private institutions and will no longer qualify for relief.

The department says it is now “assessing whether there are alternative pathways to provide relief to borrowers with federal student loans not held by ED, including FFEL Program loans and Perkins Loans, and is discussing this with private lenders.”

However, if a borrower applied to consolidate their Perkins or FFEL loans by Sept. 29, 2022, they will qualify for one-time debt relief through the direct loan program, the department says.

Here’s what you need to know about your eligibility for relief.

What is a Perkins loan

A Perkins loan is a low-interest federal student loan that is based on financial need, according to the Office of Federal Student Aid.

Perkins loans ended in 2017, but borrowers still hold debt from loans they took out years ago.

Unlike other federal loans, schools are the lenders for Perkins loans, which are subsidized by the federal government, which pays interest on the loans while a borrower is in school. Repayment usually starts for borrowers nine months after they finish school, or if they are enrolled as less than a half-time student.

There are some existing circumstances in which a Perkins loan can be canceled or discharged.

Some teachers can have up to their full loan canceled based on their job and the length of time they served. Other public service jobs qualify for cancellation, too. More information can be found here.

What is an FFEL Program Loan

Federal Family Education Program loans are private loans managed by banks that are federally guaranteed, according to NPR’s reporting. FFEL loans were discontinued in 2010 and borrowers were encouraged to opt for the direct loan program instead.

Only a small percentage of borrowers still have FFEL loans, the department told McClatchy News.

Borrowers may still have these loans if they attended school before July 1, 2010, the Department of Education says. FFEL program loans include program include Subsidized Federal Stafford Loans, Unsubsidized Federal Stafford Loans, FFEL PLUS Loans and Consolidated Loans.

An administrator told NPR the changes to the eligible loans are expected to impact about 800,000 borrowers. Although federal data shows that 4 million borrowers hold commercial-FFEL loans, many of these borrowers also hold direct loans and can still consolidate their FFEL loans.

When does relief start

The application for student loan relief is expected to open as soon as October, which is next week.

After applying, borrowers should expect their relief to arrive in about six weeks, according to the department.

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