The Education Department is 'assessing' whether student-loan borrowers with privately held loans could qualify for Biden's debt cancellation

• The Education Department is determining whether to expand student-debt relief to all FFEL borrowers.
• Borrowers with commercially-held FFEL loans can consolidate them into direct loans to qualify for relief.

President Joe Biden's student-loan forgiveness plan may be the most expansive one yet, but it still leaves millions of borrowers out.

The majority of borrowers with federal student loans will be eligible to access Biden's $10,000 to $20,000 in relief if they make under $125,000 a year. That means that any borrowers with federally-held loans — subsidized and unsubsidized loans, parent PLUS loans, graduate PLUS loans, and defaulted loans — taken out prior to June 30, 2022, can apply in early October to cut their balances.

However, the waters are a bit murkier when it comes to the Federal Family Education Loan (FFEL) program. The FFEL program originally allocated privately-held loans that were guaranteed by the Education Department. When the program ended in 2010, the department bought some of the loans and they became federally-held. However, about 5 million borrowers continue to have commercially-held FFEL loans, meaning they are not eligible for federal relief.

According to an FAQ posted by the department, it is "assessing whether to expand eligibility to borrowers with privately owned federal student loans, including FFEL and Perkins Loans."

"In the meantime, borrowers with privately held federal student loans, such as through the FFEL, Perkins, and HEAL programs, can receive this relief by consolidating these loans into the Direct Loan program," the FAQ added. If approved for consolidation, these borrowers will be eligible for the relief. The decision facing the department is whether or not to make all such borrowers automatically eligible without requiring consolidation.

Consolidation allows borrowers to combine the federal loans they might hold into one loan with a fixed interest rate, and the department says it's an action borrowers can take if they wish to qualify for federal relief. Borrowers can apply to consolidate their debt into federal direct loans through this form, but it could take over a month for the application to process and could coincide with the timeframe to apply for debt relief.

At this point, the department has not yet provided an update on whether it will expand eligibility for Biden's relief to all FFEL borrowers. It also maintained that borrowers that once had federal loans and consolidated them into private loans will not be eligible for relief.

All other student-loan borrowers who have federal loans will likely not need to take additional action until October, when it comes time to apply. They will have until December 31, 2023 to submit the form, and eight million borrowers will also be automatically eligible for loan forgiveness because the department has their tax information either through a FAFSA form or applications for income-driven repayment plans.