Four million borrowers are now being excluded from student loan forgiveness — here's who is being removed and what you can do

After millions celebrated the announcement of federal student loan forgiveness, some are now having that excitement taken away from them.

In a change published Thursday, the Federal Student Aid website states that public student loans not held by the Department of Education such as Federal Family Education Loan (FFEL) or Perkins Loans aren't eligible to receive one-time forgiveness.

Here's what you need to know.

Up until today, those with FFEL and Perkins loans had the opportunity to consolidate their student loans into Direct Loans owned and serviced by the Department of Education. In an abrupt decision, those borrowers who didn't consolidate may no longer be eligible for student loan forgiveness.

It's likely this decision stems from two legal challenges filed in court against the Biden administration's federal student loan forgiveness initiative. Both focus on one keyword: harm.

Both complaints, one from an individual citizen and another from a group of Republican states — both focus on the 'harm' they will receive from the widespread forgiveness. And this hasty decision seems to reflect the same theme.

FFEL and Perkins loans are slightly different than other federally backed student loans as these are owned by private banks, but guaranteed by the government. The banks earn revenue from servicing and maintaining those loans. So if the loans are forgiven, the banks will lose out on that income. And if this happens, legal experts suggest the banks could sue and claim they were 'harmed' by the student loan forgiveness initiative brought by the Biden administration.

The FFEL program ended in 2010, but still services about four million borrowers and holds about 7% of the total federal student debt portfolio, or roughly $113 million according to Federal Student Aid data.

If your loans are either FFEL or Perkins loans and weren't consolidated into Federal Direct loans, the odds of obtaining forgiveness may be slim.

The Federal Student Aid website says: "[The Department of Education] is assessing whether there are alternative pathways to provide relief to borrowers with federal student loans not held by [The Department of Education], including FFEL Program loans and Perkins Loans, and is discussing this with private lenders."

If you currently have any type of federal student loan, including FFEL or Perkins loans, it's highly advised to pay close attention to any correspondence from your loan servicer, as well as your payment portal for additional information and updates.

If maintaining your student loans with the federal government isn't the right solution for you any longer, you may consider refinancing your student loans once the repayment moratorium ends in January 2023. If you refinance your federal student loans, you lose federal protections which could exclude you from future student loan forgiveness, but it can allow you to get a lower interest rate and better terms on your current student loan.

Here are some of our favorite private student loan lenders for refinancing:

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* Fixed rates range from 3.99% APR to 10.99% APR with 0.25% autopay discount and 0.125% SoFi Plus discount. Variable rates range from 5.74% APR to 10.99% APR with 0.25% autopay discount and 0.125% SoFi Plus discount. 

Unless required to be lower to comply with applicable law, Variable Interest rates will never exceed 13.95% (the maximum rate for these loans). SoFi rate ranges are current as of 8/19/26 and are subject to change at any time. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. You may pay more interest over the life of the loan if you refinance with an extended term.

Autopay Discount: The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly payments as outlined in your loan agreement by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. When the autopay interest rate deduction is added or removed, the next time the loan is re-amortized (quarterly for fixed rate loans; monthly for variable rate loans),the principal balance of your loan will be spread over the remaining loan term, and your monthly payment amount will change. This benefit is suspended during periods of deferment, grace period, or forbearance. Autopay is not required to receive a loan from SoFi.

Once you become eligible during the initial period, the discount will be removed or reinstated depending on whether the criteria have been met. Each time your loan is re-amortized, your monthly payment amount will change based upon the interest rate that was in place. SoFi reserves the right to modify or terminate this offer at any time for unenrolled participants. You are not required to meet these criteria to be approved for a loan.