Student Loan Advocates Push Automatic Loan Discharges for Disabled Borrowers

By Joelle Fredman, NASFAA Staff Reporter

In separate letters sent Tuesday, two groups of student loan advocates urged Education Secretary Betsy DeVos to focus on automatically discharging the student loan debt of disabled borrowers. Both letters asked DeVos to use her regulatory authority to extend an executive order providing automatic relief to veterans under the Total and Permanent Disability (TPD) program to cover all borrowers, and to recognize the application process for the program has resulted in hundreds of thousands of borrowers being denied loan forgiveness.

Despite recent efforts by the Department of Education (ED) to share data with the Department of Veterans Affairs (VA) and the Social Security Administration (SSA) to identify borrowers eligible for TPD and notify them of their eligibility, a majority of those borrowers are still not receiving debt relief. In the letter sent by more than 30 higher education, disability rights, and veterans groups, they wrote that as of November 2019, 60% of borrowers identified by SSA did not receive “the relief they are entitled to,” and between March 2016 and September 2019 — as revealed by a recent NPR report — only 28% of SSA-identified borrowers were on track for a loan discharge.

In August 2019, President Donald Trump issued an executive order for ED to automatically cancel student loan debt through TPD for veterans, arguing the application process was “prevent[ing] too many of our veterans from receiving the relief for which they are eligible.” The groups requested DeVos apply the same rationale to borrowers identified through the SSA match.

“The only thing standing in the way of relief for 350,000 Americans with disabilities is Betsy DeVos’s will to get it done,” said Alex Elson of the advocacy group Student Defense, in a statement. Elson’s organization signed onto the letter.

“She is going so far as to seize the disability benefits that many borrowers with disabilities depend on to survive, all to collect on loans she knows they do not owe,” Elson continued.

In the second letter, sent by student loan advocates in seven states and Washington, D.C., the groups explained that it is often difficult for disabled student borrowers to complete the necessary paperwork to actively apply for debt relief “due to the disability itself” —or because of frequent hospital visits — and to continue to submit the documentation needed to prove their status for three years after their loans are discharged. 

“These administrative hardships are unwarranted given that permanently disabled borrowers are entitled to have their loans discharged,” the group wrote. “... It is therefore critical that as Secretary you use your regulatory authority and access to borrower information to create the least onerous path to relief for this population, both as they apply for relief and to satisfy the monitoring requirements.”

ED spokeswoman Angela Morabito told NBC News ED is “interested in providing automatic discharge to these borrowers” and that she believes the Fostering Undergraduate Talent by Unlocking Resources for Education (FUTURE) Act, which was passed in December, “makes this a possibility — but will require [ED] to undergo negotiated rulemaking.”

The bill permits taxpayer data sharing between the Internal Revenue Service (IRS) and ED and/or its contractors for the purpose of verifying income for applicants requesting or renewing eligibility for income-driven repayment plans, as well as for the three-year monitoring period after a borrower has received a loan discharge for total and permanent disability. 

In House Democrats’ bill to reauthorize the Higher Education Act (HEA) — the College Affordability Act (CAA) — lawmakers also touched on changes to disability loan discharges, proposing to institute automatic income monitoring for borrowers in income-driven repayment programs and for borrowers seeking loan cancelation for total and permanent disability.


Publication Date: 3/4/2020

Ben R | 3/4/2020 2:34:59 PM

That is an excellent question Mary. It also raises the question, at what point should loans be automatically discharged for someone with a TBD? After each disbursement, each year, or the end of the program? How do they know when a student is "done" with all of their education? I don't think lawmakers thought about this when discussing automatic discharge.

Mary M | 3/4/2020 12:34:50 PM

Questions: My understanding is that discharge of loans due to total and permanent disability not only forgives the borrower's past federal student loans, it also prohibits that student from borrowing federal student loans in the future unless the student gets a physician's certification of the borrower's ability to engage in substantial gainful activity. So, what if a totally and permanently disabled student has their federal student loans automatically discharged, but wants to continue their education because they have a career goal in mind that will lead to substantial gainful activity?

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