ED Waives Documentation Requirements for Borrowers With Total and Permanent Disability Discharges

Related Topics in the Ref Desk: Discharge, Cancellation, Forgiveness; Total and Permanent Disability

By Owen Daugherty, NASFAA Staff Reporter 

Borrowers who received loan discharges through the total and permanent disability (TPD) process will not be required to go through the burdensome income documentation process for the duration of the ongoing coronavirus pandemic, the Department of Education (ED) announced Monday. 

The roughly 41,000 borrowers who had $1.3 billion in loans reinstated due to them not submitting the necessary income paperwork required will now get their full discharges back and be refunded for any payments made during the national emergency due to the pandemic, ED stated in a release. The measure is retroactive to March 13, 2020, the day the national emergency went into effect.

The action will assist more than 230,000 borrowers in total who will no longer have to adhere to the income monitoring requirements in place for TPD recipients for the duration of the coronavirus emergency, meaning no paperwork to prove income will be requested. A senior ED official added that the department is continuing to explore additional options to make the process easier for borrowers.

“Borrowers with total and permanent disabilities should focus on their well-being, not put their health on the line to submit earnings information during the COVID-19 emergency,” Education Secretary Miguel Cardona said in the release. “Waiving these requirements will ensure no borrower who is totally and permanently disabled risks having to repay their loans simply because they could not submit paperwork.”

Notably, borrowers will also not be required to submit documentation of their income in the future for the period covered by the national emergency, ED added, and the time period will count toward Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) plan payments.

Unlike many other requirements that were waived due to the pandemic, borrowers who received or were expecting to receive discharges through the TPD process still had to submit documentation and were subject to a three-year income monitoring period during which they had to provide ED with earnings information regularly.

“We have found that this income monitoring process is often unduly burdensome on borrowers,” said a senior ED official Monday in a call with reporters, pointing to a 2016 report from the Government Accountability Office (GAO) that found 98% of reinstated disability discharges occurred because borrowers did not submit the requested documentation.

The official added that ED believes “there are a host of improvements that could be made in this program and we're exploring what options we have to make those improvements.”

The TPD discharge process, which originated in July of 2013, relieves student loan borrowers who are totally and permanently disabled according to federal program requirements of having to repay federal student loans or complete their grant service obligations. ED determines a borrower is eligible for TPD if they have a disabling condition or conditions that have lasted for five or more years, or will last for five or more years, that impairs their ability to earn income from employment. 

Currently, borrowers seeking to have their loans discharged through the TPD process are identified as eligible through a match process ED uses with the Social Security Administration and then the borrower must submit an application.

Changes to the process are under consideration, according to the senior ED official, though doing so would likely require a timely rulemaking session.

TPD, “much like a lot of our programs, is not working as efficiently as it should and we're continuing to see what we can do to deliver relief swiftly and easily to borrowers,” the senior ED official added. 

Borrowers who had their loans reinstated will see their loans return to a discharge status in the coming weeks and should see follow-up communications from their servicers, according to ED.

The announcement Monday comes less than two weeks after ED said it was rescinding parts of the previous administration’s borrower defense policy and would provide full debt relief for students who were defrauded by their institutions and had their claims approved through the program.


Publication Date: 3/29/2021

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