A worker at a student-loan company says the 'lack of guidance' from Biden's Education Department on debt cancellation is hurting borrowers: 'I'm just so worried people are going to be left out'

• A student-loan company worker expressed concern with the lack of guidance on Biden's debt relief.
• She said that FFEL borrowers in particularly are confused on whether they qualify.
• Biden's administration has maintained it is prepared to implement this blanket relief.

Student-loan companies are tasked with carrying out President Joe Biden's student-loan forgiveness plan — but a worker at one of those companies said guidance on how exactly to do that is lacking.

Leading up to Biden's August announcement of $10,000 to $20,000 in debt cancellation for federal borrowers making under $125,000, many advocates and lawmakers were expressing concerns with how exactly that relief would be implemented. Lawmakers on both sides of the aisle requested additional information from the Education Department on its preparedness to carry out blanket relief, and loan servicers themselves warned the department that it would be difficult to seamlessly implement loan forgiveness on such short notice.

A worker at a small student-loan company in Iowa told Insider that since Biden's announcement, the levels of confusion have been high — for both borrowers and servicers. 

"There's a complete lack of guidance from the Education Department on what to advise borrowers," the worker, who requested to remain anonymous but whose identity is known to Insider, said. "There's so much information borrowers still need, but this relief is on a deadline and I'm just so worried that people are going to be left out."

The worker specifically assists borrowers within the Federal Family Education Loan (FFEL) program, who have loans that are commercially-held and not eligible for federal relief. Currently, the Education Department is advising those borrowers to consolidate their loans into direct federal loans so they can qualify for forgiveness. It said on its FAQ that it's "assessing" whether to expand eligibility to those borrowers without requiring consolidation.

That guidance is confusing for a lot of FFEL borrowers who call and wonder if they qualify, the worker said. She said the most she can tell borrowers right now is simply what's listed on the department's website. The volume of calls regarding consolidation has jumped, she said, because borrowers "are so confused about the website" and the types of loans that they hold.

"There's just the one place borrowers can go to get a consolidation," the worker said. "I know in the past when the department's gotten behind on consolidation forms, it would take months to get them through, and that's what I'm really concerned about. Are they going to accept these applications for forgiveness if the consolidation doesn't happen before December 31? Can they put in the request ahead of time? Are they going to take anybody who had the consolidation application in beforehand?"

The CEO of Navient — a major student-loan company that owns some FFEL loans — Jack Remondi also expressed concerns with requiring borrowers to consolidate in order to qualify for Biden's relief, saying during Barclay's Global Financial Services Conference last week that it would be "a pretty significant undertaking" for the Education Department to process millions of consolidation applications.

In response to the worker's concerns, an Education Department spokesperson pointed Insider to the FFEL guidance already on its website and did not have any additional details to provide.

"All we can say is that we don't know anything yet"

Major student-loan companies have been dealing with confusion from borrowers, as well. Nelnet, for example, told borrowers to "hold of on calling" because it did not have any additional details to share on Biden's debt relief beyond what had already been announced. And the worker said the lack of information she can share with borrowers is "frustrating."

"We get a ton of people calling in and all we can say is that we dont know anything yet," she said.

The Student Loan Servicing Alliance — a group that represents federal servicers — wrote on Twitter that "we all eagerly await @usedgov sharing the specific details & next steps pertaining to federal #studentloanforgiveness."

—SLSA (@SLSAorg) September 12, 2022

There's also a lot at stake for borrowers before the year ends. Not only will the majority of them have to apply for student-loan forgiveness when the application becomes live in early October — those who are public servants have just over one month left to make use of expanded benefits through the Public Service Loan Forgiveness program that expire on October 31, all while preparing to resume payments on January 1, 2023.

"I have never seen this much change occurring in our student loan system in a period of four months. It's unprecedented," Bryce McKibben, senior director of policy and advocacy at the Hope Center for College, Community and Justice at Temple University, told NBC News. "We really need a massive public service announcement campaign to get this right."

Despite servicers' and advocates' concerns, the Biden administration maintains it has the capacity to execute all of those actions smoothly. White House Press Secretary Karine Jean-Pierre said during a recent press briefing that Biden has already enacted targeted loan forgiveness — for borrowers defrauded by for-profit schools, for example — and it can be done again.

"This is not the first time. We've done this before," she said. "There's a precedent here."

Do you have a story to share about student debt? Reach out to Ayelet Sheffey at asheffey@insider.com.