Here's Who Can't Get Their Student Loans Canceled

More than 40 million Americans will benefit from the White House's student debt forgiveness plan. But not all types of loans qualify.

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Expertise Personal finance, government and policy, consumer affairs
Dan Avery
3 min read

Private loans are largely omitted from the Biden administration's student debt relief plan.

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The US Education Department has officially launched the Biden administration's online student-loan forgiveness application, enabling millions of borrowers to apply to have up to $10,000 in student loans wiped away -- or $20,000 if they have Pell Grants. More than 8 million people have already applied to have their debt canceled, President Joe Biden said Monday at the White House.
But not all loans are included in the plan: Borrowers with loans administered through the now-defunct Federal Family Education Loan program or who have Perkins loans are no longer eligible for federal debt relief.

The change in guidance, which reverses eligibility for roughly 770,000 borrowers, came soon after a half-dozen Republican-led states filed a legal challenge to the forgiveness plan.

Which types of loans are and aren't covered by the plan? What options do you have? Read on to find out.
For more on student loan forgiveness, find out how to request a refund of loan payments made during the pandemic, how you can now apply for debt forgiveness and whether you'll be liable for taxes on forgiven student debt. Here also is who will automatically get their student loan debt canceled.

What kinds of student loans aren't covered by Biden's student debt forgiveness plan?

Broadly speaking, private student loans aren't included in the program -- including federal loans owned by private banks, unless they've already been consolidated through the government's direct lending program.
On Sept. 29, the Department of Education issued a statement explaining that Federal Family Education Loans were among those not eligible for forgiveness. 

Discontinued in 2010, the FFEL program allowed private lenders to issue and administer federally guaranteed loans. While there are more than 4 million Americans with commercially held FFEL loans, a Biden official told CNN, the updated policy would impact only about 770,000 of them.

Perkins loans and Health Education Assistance Loans, both administered by private institutions, are also excluded from the debt-forgiveness plan. 

The Education Department "is assessing whether there are alternative pathways to provide relief to borrowers with federal student loans not held by ED," according to the department's website

The new guidance seems to address a key element of a lawsuit filed in October by six Republican-led states -- Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina -- that alleges the White House plan would financially burden Missouri's loan servicer because it owns FFEL loans.

Will privately held loans be included later in the administration's debt forgiveness plan?

During remarks on Oct. 17 announcing the official launch of the application, Secretary of Education Miguel Cardona said the administration is looking at ways to include privately held student loan debt: "We are moving on pathways there to support those [with privately help debt], but we are moving as quickly as possible to provide relief to as many people as possible."

What kinds of loans are eligible for debt forgiveness?

Most federal student loans qualify for $10,000 of forgiveness, including William D. Ford Federal Direct Loan (Direct Loan) Program loans, defaulted loans, and FFEL and Perkins loans that are held by the Department of Education.
Borrowers with privately held FFEL Program and Perkins Loans who applied to consolidate into the Direct Loan program before Thursday are also still eligible for one-time forgiveness.

Recipients of Pell Grants are eligible for $20,000 of forgiveness.  

To qualify for any debt forgiveness under the Biden-Harris plan, individual borrowers must have earned less than $125,000 in 2020 or 2021, while married couples and heads of household have a $250,000 salary cap.

How do I apply for student debt forgiveness?

When the Biden administration announced its student loan plan in August, it said borrowers would be able to apply starting in early October.  On Monday, Oct. 17, the online student-debt forgiveness application went live officially, after being in beta testing over the weekend.
The White House has said applications will be accepted but no debt will be forgiven before Oct. 23, 2022.
Up to 8 million borrowers enrolled in income-driven loan repayment plans may get their debt erased automatically, though analysts recommend filing the forms anyway. 

"With any new government program, there is a risk of glitches, so it is best to apply just in case," financial aid expert Mark Kantrowitz told CNBC.

Read more: What You Need to Know About Filling Out FAFSA Forms