The Ministry of Education on Thursday tightened the criteria for eligibility for the post of president Joe Bidenstudent loan cancellation plan as GOP-led states sued to block relief.
The Department said those with private federal student loans, including federal loans for family education and Perkins loans, can no longer apply for Biden’s student loan forgiveness, reversing a previous announcement that such borrowers could consolidate their loans by federal direct loans for relief money.
The change could affect up to 770,000 people, CNN reported, citing a Biden administration official.
Borrowers who acted before Thursday based on earlier government guidelines will still be eligible to receive the payment, the department said. The ministry added that it was exploring “alternative avenues to provide relief” to these borrowers and negotiating with private lenders.
In August, Biden announced that the government would waive up to $10,000 per student borrower and up to $20,000 for Pell Grant recipients for those earning up to $125,000 a year. The White House also extended the freeze on student loan repayments through January.
The change in eligibility criteria comes as the Biden administration faces a lawsuit from GOP-led states alleging the president lacks the power to burden taxpayers with bills for those who choose to pursue a college education. .
Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina on Thursday sued to stop the backup plan.
“The Department of Education is required by law to collect the balance owing on the loans,” Arkansas Attorney General Leslie Rutledge said. told the Associated Press. “And President Biden doesn’t have the power to override that.”
White House spokesman Abdullah Hassan accused GOP officials involved in the lawsuit of “standing with special interests and fighting to stop aid to borrowers buried under mountains of debt.” .
Meanwhile, Frank Garrison, an Indiana-based attorney who works with the Pacific Legal Foundation, a libertarian group in California, also filed a complaint to block Biden’s action. Garrison claimed he ‘should face immediate tax liability’ as a result of debt relief, according to Axios. Indiana is among the states considering taxing student loan relief money, according to AP.
A judge on Thursday denied Garrison’s motion to suspend the plan after the Justice Department clarified that the Ministry of Education will allow those receiving automatic debt relief to opt out.
The Congressional Budget Office said the relief would cost up to $400 billion. But White House officials called the price “highly uncertain,” according to the New York Times. CBO the estimate for the first year of the program is lower than the administration had expectedadded the White House.