Biden’s White House quietly scales back federal student loan relief program

Just a few short weeks after President Joe Biden bribed a demographic with which he struggles in the polling offered to cancel some of the billions in college loan debt held by millions of Americans, the administration is already changing the rules.

According to Politico, the White House, through the Department of Education, announced that a subset of federally-backed loans that are currently owned by private entities will no longer qualify for the debt relief program. 

The Education Department explained that it had to make the decision due to the fact that expected legal challenges would likely make it impossible for the federal government to have any say on canceling privately-held loans.

The sudden change in the rules, which have infuriated many, came at the same time a group of GOP attorneys general took legal action against the administration’s program.

Legal battles begin

The attorneys general of Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina asked a federal judge last week to trash Biden’s program.

Their argument? It’s unconstitutional, at the very least, if not completely illegal.

In their joint lawsuit, the Republican AGs dialed in on privately held federal student loans. Some of the AGs argued that the program will cause their states financial harms, mostly in the realm of lost tax revenue.


The student loans that are guaranteed by the federal government but held by private entities account for a relatively small, and shrinking, subset of all outstanding federal student debt. They comprise just several million of the roughly 45 million Americans with federal student loans.

But there are significant business interests that depend on the federally guaranteed loan program — a wide range of private lenders, banks, guaranty agencies, loan servicers and investors. That industry is widely seen, both inside and outside the administration, as presenting the greatest legal risk to the debt relief program.

DOE responds

“Our goal is to provide relief to as many eligible borrowers as quickly and easily as possible, and this will allow us to achieve that goal while we continue to explore additional legally available options to provide relief to borrowers with privately owned FFEL loans and Perkins loans, including whether FFEL borrowers could receive one-time debt relief without needing to consolidate,” a DOE spokesperson said.

While only a portion of current and former students fall into the category of having a privately-held federal loan, the number is not small.

Politico noted: “The most recent federal data, as of June 30, shows there were 4.1 million federal borrowers with $108.8 billion of loans held by private lenders.”

CNBC added that of that subset, the new rule change would affect roughly 770,000 borrowers. That’s still a lot of people who will likely be quite upset with the administration.