President Joe Biden’s administration announced it’s scaling back the federal student loan cancellation program excluding about 800,000 borrowers.
Jeff Guernesy, associate professor of finance at Cedarville University said the outstanding federal student loan debt is $1.6 trillion with 43 million borrowers.
Guernesy said the latest update to the program could impact hundreds of thousands of those borrowers.
“Federal loans are all made directly by the federal government now, not through a private lender, and so what the administration announced today, is some of those loans serviced by a private lender, but guaranteed by the federal government, won’t be eligible for the student loan forgiveness,” he explained.
Meaning those who took out “Perkins” or “Federal Family Education” loans will no longer be qualified, according to the Department of Education.
But Guernesy said those kind of loans are no longer available and haven’t been since 2010.
With that, there is a chance those students have paid off their student loans already he said.
He also adds that this plays into the whole fairness issue.
“It doesn’t seem fair that someone else is being forgiven, or those that didn’t go to college and were in some sense they’re subsidizing this debt forgiveness,” he said.
The department has not released the reasoning for excluding these specific borrowers.
©2022 Cox Media Group