On Sept. 30, Hannah Regier called the Vermont Student Assistance Corporation, the state’s nonprofit lender, seeking information about student loan relief.

The Athens artist and town official has been slowly paying off student loans since finishing graduate school in California 15 years ago, but she still has roughly $40,000 in student loan debt from the Vermont Student Assistance Corporation, or VSAC.

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Under President Joe Biden’s student loan relief plan, announced by the administration on Aug. 24, Regier believed that she was eligible for up to $20,000 in loan forgiveness. But she was a day too late.

A VSAC counselor informed her that, the day prior, the Biden administration had quietly changed the criteria for loan relief — meaning that Regier’s was apparently no longer eligible.

“It really sucks,” Regier said in an interview. “I definitely used the F-word a couple of times with that poor counselor.”

Regier is not alone. The changes in the loan forgiveness criteria — enacted discreetly late last month — mean that an estimated 800,000 borrowers across the country are now no longer eligible for loan relief.

That figure could include thousands of people who borrowed money in Vermont.

In late August, Biden announced that student borrowers could be eligible for up to either $10,000 or $20,000 in one-time student loan relief, depending on their eligibility for Pell Grants, which is federal aid geared toward low-income students.

That aid initially included borrowers who took out loans through the Federal Family Education Loan Program, often called FFEL loans. FFEL loans were guaranteed by the federal government but lent out by private lenders, including banks and nonprofit lenders like the Vermont Student Assistance Corporation.

FFEL loans were discontinued in 2010. But over 4 million borrowers still hold such loans, according to a National Public Radio report.

That includes 10,741 people who, like Regier, borrowed through VSAC, according to Marilyn Cargill, the organization’s vice president for financial aid services, marketing and research.

Those 10,741 people include former Vermont residents who left the state for college, as well as students who came from out of state to attend Vermont schools. Roughly 37% of those borrowers currently have Vermont addresses, Cargill said.

Those borrowers have a total of approximately $250 million in FFEL loan debt, according to VSAC.

Prior to Sept. 29, the federal government’s student aid website told borrowers that they could become eligible for debt relief on their FFEL loans by “consolidating” them into a current federal loan program, the Direct Loan Program.

That process involves filling out an online form, according to Cargill, after which the federal Department of Education works to fold those loans into its own debt portfolio.

But on Sept. 29, the federal government quietly changed its eligibility criteria. Borrowers with those FFEL loans “cannot obtain one-time debt relief by consolidating those loans into Direct Loans,” the website now reads.

Federal officials told NPR that the change would affect roughly 800,000 borrowers. But it’s unclear how many Vermonters that reversal will affect.

For one thing, high-income borrowers — those with a yearly income of $125,000 or more per person, or $250,000 for a household — are ineligible for debt relief.

What’s more, many borrowers have both FFEL loans and publicly held Direct Loans.

So if a borrower has $20,000 in federal Direct Loan debt in addition to FFEL debt, they could receive the maximum amount of relief without even touching their FFEL loans.

But since the change in the Biden administration’s guidance, Cargill said, VSAC has “been dealing with some students who are incredibly disappointed and really frustrated.”

Regier was one of those students. Because of those loans, and the cost of private health care, she said, it paradoxically makes more sense to keep her income below certain levels to stay eligible for more favorable repayment plans.

But without those loans, she said, she would be able to expand her fiber arts business and improve her credit score.

“It sucks to have the loans. It really does,” she said. “They’re just kind of like a dead weight on me.”

Cargill said that VSAC has contacted Vermont’s congressional delegation to help “ensure that FFEL borrowers regain their eligibility to participate in this program.”

In a joint statement, Vermont’s congressional delegation said that “confusion, bureaucratic red tape, or cynical legal attacks” should not keep FFEL borrowers from the federal loan forgiveness program.
“President Biden’s decision to reduce the outrageous level of student debt in our country is an important step in providing real economic relief for millions of people in this country, including tens of thousands of Vermonters,” reads the statement, which was attributed to Sens. Patrick Leahy, D-Vt., and Bernie Sanders, I-Vt., and Rep. Peter Welch, D-Vt. “No one should bear the burden of student debt just to get an education. As a delegation, we are committed to working together to help alleviate the burden of student debt for every Vermonter.”