Blocking Student-Loan Borrowers With Privately Held Debt Is 'Big Mistake': Dems

Blocking Student-Loan Borrowers With Privately Held Debt Is 'Big Mistake'

Biden's decision to block thousands of student-loan borrowers with privately held debt from his loan forgiveness is 'disturbing' and a 'big mistake', some Democratic lawmakers say

US President Joe Biden OLIVER CONTRERAS/AFP via Getty Images

• Biden decided to exclude thousands of FFEL borrowers from his student-loan forgiveness.
• Some Democratic lawmakers told Politico they were not aware of this change in advance.
• "I certainly don't think we should be going backwards in any way," Rep. Ro Khanna said.

President Joe Biden's decision to scale back eligibility for his student-loan forgiveness plan came as a shock to some Democratic lawmakers.

Last week, Biden's Education Department released updated guidance on the federal borrowers eligible for up to $20,000 in debt cancellation and concluded that those with loans under the Federal Family Education Loan (FFEL) program cannot access the one-time relief.

Until that point, the department said it was "assessing" whether the borrowers within that program who had privately-held debt guaranteed by the department could get federal relief. It ultimately decided they would not be eligible, impacting about 770,000 borrowers.

As Politico reported, some Democratic lawmakers were not aware of this change beforehand and were disappointed by the news. 

"I have to look more into the details, but I think we should stick with what the president committed to initially," California Rep. Ro Khanna told Politico. "But I certainly don't think we should be going backwards in any way. That would be big mistake to take away hope from young people who are counting on this forgiveness."

Illinois Rep. Chuy Garcia said lawmakers should have been alerted to the changes in the program.

"Yeah, there's concern," he said. "We've all been very optimistic that this forgiveness would begin soon, and to read about it is a little disturbing."

The change was likely a response to the mounting number of lawsuits on Biden's debt relief plan, as Politico reported. Over the past week, Republican-led states have pursued legal action against the loan forgiveness, and taking FFEL borrowers out of the equation was an effort to avert those legal battles and reduce costs of the plan. 

"Our goal from day one has always been to deliver relief to as many borrowers as possible as quickly as possible, and this change helps us achieve that, so we will continue to make sure we zero in on that," White House Press Secretary Karine Jean-Pierre said during a press briefing. "The Department of Education continues to explore additional ways to provide relief to those borrowers with commercially-held loans."

As indicated on the studentaid.gov website, the department is "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."

For now, all other federal student-loan borrowers can expect an application for student-loan forgiveness to become available early this month. The department affirmed the application with be "short and simple," but exact details on what information borrowers will have to submit remain to be seen.