The pause on student loan debt finally made me feel like I could breathe. Back in March 2020, when President Biden announced that bill collection on all government-funded student loans would be paused, it allowed me the opportunity to save my money for a rainy day for the first time in my adulthood. It instantly changed my quality of life: I was able to live on my own and could afford a decent gym membership. After two years, that pause is still in effect, with payments expected to resume in January.
What’s more, this August, Biden announced that some borrowers would soon be eligible to be forgiven for as much as $20,000 in student loan debt. But in the weeks since, that plan has gotten more complicated—and, for some people, what initially seemed like a path to financial freedom might not be much assistance at all.
Initially, Biden’s mandate granted up to $10,000 for federal student loans, including an additional $10,000 in relief for Pell Grant recipients making less than $125,000 (or $250,000 in a joint income household). The general understanding of the forgiveness plan seemed to be: If you received a loan that was distributed by the government—whether that loan was federal or private—you were qualified to be forgiven. Last week, the Department of Education’s directive quickly changed, reversing the decision for what it says is about 770,000 borrowers.
Does the reversal apply to me?
If your student loans are held by the U.S. Department of Education, then you’re still eligible for debt relief. That includes Direct Loans (also known as William D. Ford Direct Loans), Parent PLUS Loans, and GRAD Plus Loans. If you defaulted on your loans to the Department of Education—meaning you were unable to keep up with payments due to financial hardship—you’re still included. And if you consolidated other types of loans into Direct Loans in an attempt to lower your payments over time, the forgiveness applies to you, too.
The reversal only applies to people with FFEL and Perkins Loans, two now-defunct programs that were funded by states and private lenders like Sallie Mae, banks, and investors. That’s why consolidating into Direct Loans made a difference, because it put those types of loans under the control of the federal Department of Education. The deadline for consolidating them was September 29, only one month after Biden’s announcement—an unfortunately short amount of time, considering many of us are still confused about how any of this works.
According to the Department of Education, most borrowers need to apply to receive forgiveness. Applications are expected to be available this month, although the Department of Education has not confirmed an exact date, and they’re expected to be open until December 31, 2023. Update: The application is live now.
Why was the decision reversed?
While there is no official reason pointing to why the Department of Education and President Biden scaled back on debt relief eligibility, many believe it's related to a recent lawsuit filed by Missouri, Nebraska, Iowa, South Carolina, Kansas, and Arkansas, six Republican states who oppose the administration’s debt relief program. The FFEL is prominently mentioned throughout the complaint, which argues that various state entities that currently hold these loans, like the Higher Education Loan Authority of the State of Missouri, would lose revenue if those loans were forgiven.
Those states’ lawsuit contends that canceling the debt is a breach of President Biden’s executive power, despite the Trump administration using the HEROES Act to pause interest rates and payments during the pandemic. In August, the Biden administration extended the pause and proposed the one-time cancellation under the same HEROES Act of 2003.
What is the HEROES Act?
The Higher Education Relief Opportunities for Students Act (HEROES Act) was designed to alleviate financial hardship for students during a national emergency. Developed after the terrorist attacks on September 11, 2001, the act granted the Secretary of Education the authority to waive orders on student loans. Since COVID-19 was declared a national emergency on March 13, 2020, the Secretary halted repayment on federal loans. In March 2022, the Senate voted to end the national emergency, though, a move that muddles the administration's argument that the HEROES Act still applies.
What are my next steps?
Lots of people who received FFEL and Perkins Loans also have Direct Loans. If this is you, you can still receive forgiveness on your Direct Loans.
If you had FFEL and/or Perkins Loans and consolidated your debts into Direct Loans before the September 29 deadline, remember that you still have to apply to be forgiven. You will be notified once the cancellation has been added to your account.
If you didn’t consolidate your debt in time, the story might not be over. The Department of Education says it is discussing “alternative pathways” with private lenders to provide relief for those affected. The best way to follow along is to check Federal Student Aid for updates. Because it seems clear: Even if loan forgiveness applies to you, it’s going to be on you to make sure you’re on top of whatever convoluted process helps you get it.
Kristin Corry is a senior staff writer at VICE.