In a remarkable reversal that will affect the fortunes of many student loan borrowers Cory Turner reporting for the NPR (National Public Radio) Ed team says, “the U.S. Department of Education has quietly changed its guidance around who qualifies for President Biden’s sweeping student debt relief plan.” 

Turner reported that, “at the center of the change are borrowers who took out federal student loans many years ago, both Perkins loans and Federal Family Education Loans, and FFEL loans issued and managed by private banks but guaranteed by the federal government.”     

Turner noted that today, “according to federal data, more than 4 million borrowers still have commercially-held FFEL loans and that until just recently the department’s own website advised that, “as of Sept. 29, borrowers with federal student loans not held by ED cannot obtain debt relief by consolidating those loans into Direct Loans.

Multiple legal experts tell NPR the reversal in policy, “was likely made out of concern that the private banks that manage old FFEL loans could potentially file lawsuits to stop the debt relief, arguing that Biden’s plan would cause them financial harm.”

 n fact, a new lawsuit filed recently by six state attorneys general makes this very argument.

Persis Yu of the Student Borrower Protection Center, says, “FFEL lenders have shown their true colors and instead of working in the interest of student loan borrowers...their customers...these lenders are holding hostage relief to millions of borrowers in order to keep making a buck off of borrowers suffering.”

Changing the policy now, and limiting  the number of FFEL borrowers who can conceivably qualify, may make these FFEL banks less likely to legally oppose debt relief.