Biden Cancels Some Student Loan Forgiveness: How PA Is Impacted

PENNSYLVANIA — What was hailed in many Democratic circles as a historic and landmark student loan debt relief package from President Joe Biden's administraiton earlier in the summer is turning out to not be quite as comprehensive as originally billed.

Without making an announcement, the Biden administration has changed the language of its original proposal. Some 4 million Americans with Perkins or Federal Family Education Loans (FFEL), loans which are privately held, will no longer qualify for forgiveness.

The federal website on debt forgiveness was changed with the following note: "As of Sept. 29, 2022, borrowers with federal student loans not held by (the Department of Education) cannot obtain one-time debt relief by consolidating those loans into Direct Loans."

Perkins and FFEL loans, issued by private banks but guaranteed by the federal government, were the mainstay for federal student loans until the FFEL program ended in 2010.

It's not clear exactly how many Pennsylvanians are among those 4 million nationally. The decision will directly impact about 800,000 borrowers, a Biden administration official told NPR.

Some 2.1 million Pennsylvanians have some kind of student loan debt, with an average per borrower debt of $33,426 and an average monthly payment of $283. The Biden package will still help relieve the total $71.5 billion debt owed by Pennsylvania borrowers, but it's clearly not quite the game-changing move establishment Democrats claimed it to be. The package falls far short of getting many students out of the hole they're in, and cancelation-advocates say it's the crippling system that bankrupts students that needs more reform.

"If SoFI, a student loan refinancing company, could give its CEO a 92% raise last year paying him a grand total of $103 million in compensation and spend $625 million to put its name on the LA Rams football stadium, you know what President Biden can do?" U.S. Sen. Bernie Sanders said in the wake of the original bill. "Cancel all student debt."

Biden's original proposal — the one that made headlines — was comprehensive. It promised $10,000 in forgiveness for all borrowers earning $125,000 or less or families making $250,000 or less, regardless of the type of loan they took out.

The policy change came as a group of six Republican attorney generals sued to block the loan forgiveness, arguing it's illegal and unconstitutional. Since the Biden administration announced the forgiveness plan last month, they also faced concerns over potential legal challenges from the student loan industry.