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Department of Education Clarifies Biden Forgiveness Rules for FFELP Loans

We are still waiting on some details from the Department of Education, but newly released information should help most borrowers manage their FFELP loans.

Written By: Michael P. Lux, Esq.


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Department of Education Clarifies Biden Forgiveness Rules for FFELP Loans

We are still waiting on some details from the Department of Education, but newly released information should help most borrowers manage their FFELP loans.

Written By: Michael P. Lux, Esq.


Affiliate Disclosure and Integrity Pledge

When President Biden first announced up to $20,000 of student loan forgiveness, details were sparse for FFELP loan borrowers.

FFELP loans are notoriously complicated because they are not eligible for all repayment plans and forgiveness programs. However, consolidation can sometimes address these issues.

The Department of Education recently released more detailed information on FFELP loans and the procedure for cancellation. While some questions remain unanswered, there is now enough information for most borrowers to move forward with a plan.

Biden Forgiveness/Cancellation for FFELP Loans

If you have federally-held FFELP loans, they are eligible for loan cancellation. If your FFELP loan currently has 0% interest and benefits from the payment pause, it is federally held. Borrowers in this category won’t have to take any extra steps because their loans are FFELP.

Things are a bit more complicated for borrowers with commercially-held FFELP loans.

Currently, the Department of Education is “assessing whether to expand eligibility to borrowers with privately owned federal student loans, including FFEL and Perkins Loans.”

Consolidation May Be Necessary

Even if the Department of Education ultimately decides not to forgive privately held FFELP loans, it is still possible for borrowers to have the debt forgiven.

Federal direct consolidation loans are eligible for cancellation. Thus, borrowers could consolidate their FFELP loans into a federal direct loan to qualify for forgiveness.

This is excellent news for the FFELP borrowers who want to take advantage of the Limited Waiver on PSLF or the IDR Payment Count Update. Because of these temporary programs, consolidation doesn’t restart the forgiveness clock. This makes consolidation less risky than in the past.

Does a new consolidation loan miss the deadline? To be eligible for forgiveness, the borrower must have had the balance by June 30, 2022. Some borrowers worry that a new consolidation loan will miss this critical deadline.

Fortunately, the Department of Education will cancel consolidation loans “as long as all of the underlying loans that were consolidated were first disbursed on or before June 30, 2022.”

FFELP Joint Consolidation Borrowers May Miss Out

FFELP Joint Consolidation Loans, often called spousal consolidation loans, are remnants of a program that Congress discontinued.

Borrowers with these loans cannot consolidate into a federal direct loan. Thus, they may not be eligible for forgiveness. However, it is still possible at this point that they qualify. If the Department of Education cancels privately-held FFEL loans, they could include spousal loans.

I think the FFEL Joint Consolidation Loans are the worst federal loans, and that Congress should fix the problem for the borrowers stuck with this debt. Now is a great time for borrowers with these loans to reach out to their elected representatives. Let them know you want a way to separate the debt and qualify for Biden Forgiveness.

FFEL vs. FFELP Loans

If you’ve been digging into this issue, there may be some confusion between FFEL and FFELP loans.

They are different acronyms, but they mean the same things. The loans refer to the Federal Family Education Loan Program. At times the Department of Education uses the FFEL acronym. Other times they use FFELP.

There isn’t a difference between FFEL and FFELP.

Federally Held Loans vs. Privately Held Loans

Over the last few years, the distinction between federally held loans and privately held federal loans has become significant.

All FFELP loans started as privately held federal loans. A private lender provided the money for the student loan and collected payments. The government guaranteed the debt — meaning if the borrower couldn’t pay, the lender still got paid.

The government wisely concluded that assuming all of the risks without getting much benefit was a lousy plan. The Department of Education terminated the FFELP program, and the government started buying back the existing FFELP loans.

If your FFELP loan is federally held, it means it qualifies for the newly announced forgiveness program.

The Best Strategy

This is one situation where there isn’t a one size fits all approach.

If you have FFELP loans, there are basically two options:

  • Consolidate Now – Federal direct consolidation should get serious consideration from all FFELP borrowers. Getting the debt canceled is a question mark at this point, but the Limited Waiver on PSLF and the IDR Payment Count update are certainties. If you could benefit from these soon-to-end programs, now is the time to consolidate.

  • Wait for More Information – If the only benefit of consolidation is qualifying for forgiveness, now is probably the time to wait. Questions remain unanswered, but we are likely months away from any major Biden Forgiveness deadlines.
About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

16 thoughts on “Department of Education Clarifies Biden Forgiveness Rules for FFELP Loans”

  1. I sold my federal loans to a private company to lower the interest rate. Is there anything I can do to take advantage of the PSLF program? I am eligible except for the fact that I sold the loans to a private company a few years ago. Advice?

  2. It’s amazing to me how shrewd the government is. Appearing to offer forgiveness to people like myself who have spent years in IBR and IDR plans because of low income… Unable to get loans forgiven through bankruptcy (because they’re federal)…YET… cut out of forgiveness “because they’re private.”

    As if getting hurt financially by going to college wasn’t bad enough, getting sandbaggeed with an FFELP loan is a nightmare.

  3. I have two FFELP loans – Navient website says they are under Federal but I see an interest rate and have made payments. So not really clear if these are federal and private. I am thinking I should consolidate under the Federal Direct Loan program just in case.

  4. I have two FFELP loans managed through Navient. My expected payment completion is 2027. I owe under 10k at present. I would love to be rid of the remaining balance however. Other articles have advised consolidating the Navient managed loans into a Direct Loan under ED. I’ve contacted ED and Navient and neither have additional details. After reading this it sounds like I should wait for additional information but wondering if any new info is out. Unclear if I should wait or consolidate with a Direct Loan. (If I do move forward with a Direct Loan application, do you know what type of repayment I must choose to qualify for the relief or does it not matter, for example, do I need to select the IDR for the new Direct Loan?) Any, any, any advice would be welcome. Thank you

    • I think we are still at that waiting point. Consolidating your loans won’t hurt your chances of getting the 10k forgiveness, but it might not be necessary. We will have to wait for the Department of Education to clear up the details on that front.

      • I too have loans managed with Navient. They were originally federal student loans but I consolidated them after graduation to get a lower interest rate, because that was advised to me by my financial aid office and all the info that was available at that time (2002). 20 years later and I still haven’t made a dent in them, I’ve only covered interest and actually the balance has grown because of periods of deferment where interest was capitalized. Navient just told me that I would have to transfer my loans to the Dept of Ed to qualify for any relief from the Cares Act or the forgiveness from the Biden-Harris Admin. When I called the Dept of Ed though to find out how to do that, I could not find an option on the automated system to route me to the correct place. There wasn’t even an option to just hold for a representative. It is quite frustrating. In many ways, I regret ever getting student loans. It was what everyone recommended back then, because it was the federal government lending you money to get a higher education. But now that the relief is a possibility, I’m finding out that my loans aren’t backed by the federal government any more. Would it be wise to pursue transferring them from a private lender like Navient to the Dept of Ed? From many articles I read, it says that’s not possible. It almost seemed like the Navient rep just wanted to get me off the phone. I was ready to apply for forgiveness as soon as the application became available, but now I don’t know what to do. Am I just out of luck?

      • It really depends on the loans that you have. From the sounds of things, you might have an FFELP consolidation loan. If that is the case, then you certainly are not out of luck. These loans are privately held federal loans. It is possible to convert to a federally-held loan by going through federal direct consolidation.

        To see whether or not your loan is a federal loan, log into studentaid.gov to pull up a list of all your federal loans. If it shows up on studentaid.gov it is a federally loan (it just might be privately held under the now discontinued FFEL program).

      • Have they given any idea of when the DOE will clear up the details on the FFEL? I know there is a deadline to apply for the cancelation, so will they even make this decision before the imposed deadline? I imagine if they don’t include them, we’ll all be running around at the last minute trying to consolidate to direct loans in order to qualify. Also, what if we’re currently in the IBR program? How will this affect our repayment status?

      • Great questions, KC. As far as getting clarification before the deadline, I think you will have plenty of time. The deadline to apply for the Biden forgiveness is 12/31/23, so we have over a year. My hope is that we get a clarification on FFEL loans before the application becomes available, which should happen in 2-3 weeks from now.

        Consolidation will change your repayment plan, in that you have to sign up for a new repayment plan for your consolidated loan. By consolidating, you become eligible for REPAYE, which is usually a better plan than IBR (some married couples would be the exception). However, if your income hasn’t changed since you last certified, your monthly payments should either stay the same or drop if you become eligible for a better plan.

  5. My FFELP loan is a consolidation loan that included a Perkins loan. I was told that because I included that loan, I would be exempt from the extra $10,000 forgiveness.
    Is this true? If so, can I consolidate a portion of that loan into a direct loan?

    • Where did you hear that information? It doesn’t sound accurate.

      It might be necessary for you to consolidate your FFELP consolidation loan into a federal direct consolidation loan, but the Department of Education hasn’t made a decision on that specific issue yet.


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