It’s something more than 40 million Americans have in common: they hold federal student loans. But the loan system is notoriously complicated, and these loans go by different names and terms depending on when they were taken out and for what purpose.

What are usually just technical differences could now determine whether or not a borrower qualifies for President Joe Biden’s unprecedented new plan to cancel hundreds of billions of dollars in federal student debt.

Biden announced Wednesday that most federal student loan borrowers will be eligible for some remission: up to $10,000 if you haven’t received a Pell grant, which is a type of aid available to undergraduates. low-income cycle, and up to $20,000 if you did. The relief is limited to people earning less than $125,000 a year, or married couples or heads of households earning less than $250,000.

Your type of loan will also determine if you qualify.

Not sure what you have? On studentaid.govyou can verify.

Learn more about personal finance:
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How the Student Loan Forgiveness Plan Works and When to Apply

Overall, the vast majority – around 37 million borrowers – will be eligible for forgiveness depending on their loan type (and then as long as they also fall under the income cap), because their debt is under that. called the William D. Ford Federal Direct Lending Program. This includes direct Stafford loans and all subsidized and unsubsidized direct federal student loans.

Under the Direct program, Parent Plus and Grad Loans are also eligible for relief, said higher education expert Mark Kantrowitz.

Then it gets complicated.

Currently, the US Department of Education states that loans are eligible if held by the department. You might be wondering: Aren’t all federal student loans held by the government?

Actually no.

The federal government began lending to students on a large scale in the 1960s. At the time, however, it did not provide student loans directly. Instead, it guaranteed debt provided by banks and nonprofit lenders, under what is now known as the Federal Family Education Loans (FFEL) program. This program was eliminated altogether in 2010, after lawmakers argued that it would be cheaper and easier to lend directly to students. Almost 10 millions people still hold FFEL loans, according to Kantrowitz.

Today, Kantrowitz said, “about half are held by the US Department of Education and about half by commercial lenders.”

There are two reasons why the government can now hold FFEL loans. When those loans go into default, the private companies that previously held them transfer them to a guarantor agency that manages the debt on behalf of the federal government, Kantrowitz said. The other reason is that the government bought back some of the loans during the 2008 credit crisis.

Because much of the debt is still held commercially, and not with the Department of Education, there are concerns that it will not be included in Biden’s forgiveness. These loans were also not covered by the Covid pandemic-era payment pause on federal student loans, drawing criticism from advocates.

“The broad student loan forgiveness is available for the same loans that are eligible for the payment break,” Kantrowitz said. “This does not include FFEL loans held by companies.”

The Department of Education did not immediately respond to a question about whether borrowers with commercially held FFEL loans will be included in Biden’s plan.

Borrowers wishing to know where their FFEL loans are held can contact studentaid.gov and log in with your FSA ID. Then go to the “My aid” tab and search for your loans. (At press time, access to the site was subject to long waits.)

Even if your FFEL loan is commercially held, all hope may not be lost. You can try calling your servicer and asking to consolidate your loans into the Direct Loans Program, said Ben Kaufman, director of research and investigations at the Student Borrower Protection Center.

Still, you might hit a wall: The White House says loans obtained after June 30, 2022 are not eligible for forgiveness. It’s possible the government will consider newly consolidated loans as loans taken after that date, Kantrowitz said.

It is important to note that nothing is set in stone yet. In theory, the government could also try to find a way to cancel these loans.

Another type of loan may also be excluded from forgiveness because it is not in government hands, Kantrowitz said: certain loans from the federal Perkins Loan Program. Some of these loans are given to the Department of Education, but most are held by colleges.

If you pay your monthly loan bill at one of the government loan services, you should be able to get the rebate, Kantrowitz said, but if your payments are sent to another private lender, you’re probably out of luck. .

All private student loans are also excluded.