For similar reasons, the Civil Service Loan Cancellation Program, which began in 2007, also excluded these FFEL borrowers. However, they often did not know this and when they called for help, customer service agents often gave them incorrect information about their eligibility. The education department is now try to remedy this problem, although too late for countless borrowers.
During the pandemic, FFEL borrowers were further disadvantaged. While most federal student loan borrowers have been able to suspend payments since March 2020, these FFEL borrowers could not.
On September 29, these same borrowers were again disappointed.
Here’s why: When I asked the Education Department in August about whether FFEL borrowers were eligible for the up to $20,000 forgiveness it had offered millions of other borrowers, a senior official said: said FFEL borrowers could “sit quietly” if they wanted to, rather than transferring their debt into the direct lending program through a process known as consolidation.
(Consolidation would have offered instant eligibility for cancellation, and many people took advantage of this. But for various reasons – different interest rates, suspicion that any transfer would go off the rails – some people found it beneficial to keep their FFEL loans where they were, waiting for further instructions.)
The official clarified that the Ministry of Education was not making any recommendations on whether to consolidate. Indeed, the ministry said it intended to allow all FFEL borrowers to get relief, even if they did not consolidate their loans.
I was not the only one to receive this message. Several borrowers have told me that their loan officers have told them the same thing. Betsy Mayotte, a decades-long student loan industry veteran who leads the Institute of Student Loan Counselorsconveyed the same “you can wait” advice.
Then, on the morning of September 29, everything changed. The Ministry of Education’s revised FAQ webpage suddenly stated that only FFEL borrowers who had, in fact, applied for consolidation before then were eligible for the new debt forgiveness.