Millions of individuals were unpleasantly disappointed to realize they weren’t eligible for the relief when the U.S. Department of Education announced at the start of the pandemic that borrowers of federal student loans could postpone their payments.
They were not included because they held a subset of Federal Family Education Loans (FFEL) loans, which were federal student loans made prior to 2010. Since the Education Department didn’t control the debt, its payment suspension policy didn’t apply to these government-guaranteed loans that were actually owned by private corporations.
There was concern that borrowers with commercially held FFEL loans would once again be excluded after President Joe Biden said last week that he would be forgiving up to $10,000 for federal student loan borrowers who didn’t earn a Pell Grant and up to $20,000 for those who did. Pell Grants are a sort of aid offered to low-income undergraduate students. (Borrowers who make more than $125,000 annually, as well as married couples and household heads making more than $250,000, are also disqualified.)
For the projected 5 million borrowers who hold a commercially owned FFEL loan, it is fortunate to note that the Education Department appears to be looking for solutions to prevent that outcome.

“The Biden administration is cutting through red tape and asserting that millions of previously overlooked borrowers will be included in its bold student debt relief plan,” said Ben Kaufman, the Student Borrower Protection Center’s head of research and investigations.
What borrowers should know is listed below.
‘About half’ of FFEL loans are held by businesses
In the 1960s, the federal government started making large-scale loans to students. But back then, it didn’t actually provide student loans. Instead, it supported the FFEL program’s non-profit and bank lenders by ensuring their debt.
After lawmakers argued that giving loans directly to students would be less expensive and easier, that program was ended in 2010. According to Mark Kantrowitz, an expert on higher education, about 10 million people still have FFEL loans.

Kantrowitz said, “about half are held by the U.S. Department of Education and about half by commercial lenders.”
The government may currently own FFEL loans for two reasons. According to Kantrowitz, when these loans are in default, the private corporations that had previously owned them shift ownership to a guarantee organization that manages the debt on behalf of the federal government. The government’s purchase of some of the debts during the credit crisis of 2008 is the additional explanation.
Visitors to Studentaid.gov can use their FSA ID to log in and see information about their FFEL loans. Then, click the “My Aid” button and look for the information about your loan.
If you consolidate, you might be eligible for forgiveness
According to the Education Department, if you’re one of the approximately 5 million borrowers with commercially held FFEL loans, you can call your servicer and consolidate into the Direct Loan Program to gain cancellation benefits.
According to a department representative, there isn’t currently a deadline for borrowers to complete this, but there probably will be one soon.

Your student loan servicer might not be aware of this possibility just yet because all of these developments are so recent, according to Kantrowitz.
He suggested that if you’re hitting a brick wall, it could be preferable to carry out the consolidation directly on the StudentAid.gov website. The “federal direct consolidation loan application” should be completed.
It may take a month or more to consolidate
According to Kantrowitz, processing a consolidation application typically takes between 30 and 45 days.
And if you haven’t heard anything after that period, make sure to find out how your application is progressing.
There may be further forgiveness workarounds to come
According to a spokesman, the Education Department will collaborate with private lenders in the upcoming months to ensure that holders of commercially held federal student loans can also take advantage of loan forgiveness.
When the government’s student debt forgiveness application becomes available, these borrowers will have more than a year to apply for the relief, so there is no need for them to take any action at this time, the spokeswoman added.
Some FFEL debtors are still not eligible for payment pause
The president also said that he would prolong the federal student loan payment moratorium through the end of December in addition to Biden’s declaration regarding student loan forgiveness.
Unfortunately, Kaufman noted, this relief does not yet apply to borrowers with commercially held FFELs.