Application for student loan relief is live, but some borrowers are no longer eligible

The online application portal for President Joe Biden’s student loan forgiveness program officially rolled out Monday. However, some borrowers are not eligible for the one-time relief.

In late September, the Biden administration altered its guidance so that borrowers with privately held Federal Family Education Loan (FFEL) Program loans or Perkins loans could no longer qualify for student debt forgiveness by consolidating them into direct loans. There is an exception for those who applied to consolidate such loans prior to Sept. 29.

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The wording on the Education Department’s StudentAid.gov website under the section about FFEL and Perkins loan eligibility was altered at the time to say, "As of Sept. 29, 2022, borrowers with federal student loans not held by the ED cannot obtain one-time debt relief by consolidating those loans into Direct Loans."

That section previously said borrowers with privately held federal student loans "can receive this relief by consolidating these loans into the Direct Loan program," according to an older version of the page archived on the WayBack Machine. The change came amid multiple states suing to pump the breaks on the student loan handout program.

"Our goal is to provide relief to as many eligible borrowers as quickly and easily as possible, and this will allow us to achieve that goal while we continue to explore additional legally-available options to provide relief to borrowers with privately owned FFEL loans and Perkins loans, including whether FFEL borrowers could receive one-time debt relief without needing to consolidate," an Education Department spokesperson told FOX Business in early October.

"The FFEL program is now defunct and only a small percentage of borrowers have FFEL loans" the spokesperson added. "This is a completely different program than Direct Loans."

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Approximately 42.8 million people have federal student loans as of the third quarter of fiscal 2022, according to Education Department data.

The student loan relief program, according to the StudentAid.gov website, seeks to cancel up to $20,000 in debt for Pell Grant recipients and up to $10,000 for non-Pell grant recipients, both subject to income requirements. Individual borrowers must have 2020 or 2021 adjusted gross incomes of less than $125,000, and it’s less than $250,000 for married couples.

Education Secretary Miguel Cardona said Monday that the administration is "working on pathways" to provide relief to ineligible privately held student loan holders. The Department of Education states on its website it is "discussing this with private lenders."

Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina filed a lawsuit challenging Biden's student loan cancellation program Sept. 29. The states argued it was "economically unwise" and "unlawful," according to a press release from the Nebraska attorney general's office.

The student loan deal could cost more than $400 billion, according to an estimate from the nonpartisan Congressional Budget Office.

Biden on Monday slammed Republican "outrage" about his debt relief program as "wrong" and "hypocritical." He also said he thought litigation wouldn’t end up stopping the program.

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The debt relief application, which takes an estimated five minutes to complete, asks borrowers for information like their legal name, email address, Social Security number and date of birth and does not require them to upload supporting documentation. It does, however, require applicants to certify the information they provide is correct and acknowledge they could face federal perjury penalties if it’s not.

The deadline to apply is Dec. 31 of next year.