ED, VA Team Up to Streamline Loan Discharge for Disabled Veterans

By Allie Bidwell, NASFAA Senior Reporter

The federal government this month will begin identifying and proactively reaching out to disabled veterans who may be eligible to have their federal student loans discharged, the Department of Education (ED) and the Department of Veterans Affairs (VA) announced Monday.

Moving forward, ED will match individuals in the National Student Loan Data System (NSLDS) with the VA database. ED will then send an individual letter to disabled veterans with federal student loans or aid through the Teacher Education Assistance for College and Higher Education (TEACH) Grant program. The letter will explain eligibility for loan discharge and will include an application for total and permanent disability (TPD) discharge.

"Our nation's veterans have sacrificed much for our country. It is important that, in return, we do all we can to give them the support and care they deserve," said Education Secretary Betsy DeVos in a statement. "Simplifying the loan forgiveness process and proactively identifying veterans with federal student loans who may be eligible for a discharge is a small but critical way we can show our gratitude for veterans' service."

The process is similar to a piece of legislation introduced by Rep. Ryan Costello (R-PA) in May 2017, dubbed the Match Veterans to Student Loan Protections (MVP) Act.

Although there is already a process in place for borrowers to have their debt discharged through TPD, it does not happen automatically. Even with the new steps ED and VA are taking, the borrowers would still have to fill out and submit an application. Some lawmakers have urged ED to automatically identify and discharge the debt of these borrowers and other groups.

In December, Sens. Patty Murray (D-WA), Elizabeth Warren (D-MA), and Jack Reed (D-RI) wrote to DeVos and urged ED to begin automatically discharging the loans of disabled veterans. 

"The men and women serving in the military sacrifice so much to keep us safe, and those injured in the line of duty should not be saddled with the burden of paying back student loans if they are unable to work," Murray said in a statement following ED's announcement. "I'm pleased Department of Education is listening to veterans, families, and Congress to take this strong step forward, and I hope they will streamline this process by making debt relief automatic for people with disabilities, including the men and women who have bravely served their country."

A bicameral, bipartisan group of lawmakers in March also wrote to DeVos, urging her to discharge the debt of parents who take out Parent PLUS loans for students who then become disabled.

In the letter, Sens. Rob Portman (R-OH) and Chris Coons (D-DE), and Reps. Jim Langevin (D-RI), Peter Roskam (R-IL), Ron Kind (D-WI), and Raja Krishnamoorthi (D-IL) wrote that parents should have their loans forgiven because "parents, like their children, agree to the terms and conditions of a PLUS loan with the expectation that such an investment will support the promise of a better future."

"Federal law already recognizes that the difficulties that befall someone who sustains a TPD necessitate a pathway to student loan forgiveness," they wrote. "Parents also deserve access to this debt relief."

Similarly, Coons, Portman, and Sen. Angus King (I-ME) in February wrote to DeVos, then-VA Secretary David Shulkin, and Acting Commissioner of Social Security Nancy Berryhill, pressing them to begin discharging loans for totally and permanently disabled individuals, including veterans, following the passage of the Tax Cuts and Jobs Act. The tax reform overhaul made loan forgiveness in those cases tax exempt.

"Now that Congress has removed the potential tax consequence associated with loan forgiveness, [ED] should immediately begin discharging student loans for eligible individuals," the senators wrote.


Publication Date: 4/17/2018

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