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ED Announces Over $5.8 Billion in Loan Discharges for Borrowers With Total and Permanent Disability

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

By Owen Daugherty, NASFAA Staff Reporter

More than 323,000 borrowers with severe disabilities will have their student loan debt discharged, totaling more than $5.8 billion in relief, the Department of Education (ED) announced Thursday.

The borrowers who will receive the relief were previously identified by ED as eligible for the benefit. ED has faced pressure in recent weeks from a bipartisan group of lawmakers calling on the department to act swiftly in providing borrowers with total and permanent disability (TPD) relief from their student loan debt.

In announcing the debt relief, ED also stated it will indefinitely extend a policy change it made during the coronavirus pandemic of no longer asking borrowers with TPD to provide information on their earnings. Additionally, ED said it is seeking, through the upcoming negotiated rulemaking sessions, to eliminate the three-year monitoring period required under current regulations. 

“Today’s action removes a major barrier that prevented far too many borrowers with disabilities from receiving the total and permanent disability discharges they are entitled to under the law,” Education Secretary Miguel Cardona said in a statement. “We’ve heard loud and clear from borrowers with disabilities and advocates about the need for this change and we are excited to follow through on it. This change reduces red tape with the aim of making processes as simple as possible for borrowers who need support.”

The changes give ED the ability to provide automatic TPD discharges for borrowers who are identified using information from the Social Security Administration (SSA). 

ED officials in a call Thursday stressed the importance of the change in ensuring the process is smooth from this point on for this subset of borrowers who will no longer have to apply to receive a discharge of their student loans. 

“This is not just a one time action. This is a permanent change to the regulations we're going to be making,” said a senior department official. “This will both pick up the people in the past but also borrowers in the future.”

ED officials said the 323,000 borrowers identified comprised all who were eligible for a TPD discharge as of the June quarterly match. The policy change and loan discharges will go into effect with ED’s next quarterly data match with the SSA, which will take place in September.

Eligible borrowers will receive notices of their approval for a discharge in the weeks after the match occurs, and ED added that it expects all discharges will occur by the end of the calendar year.

ED previously removed the application barrier for borrowers with TPD who are identified through data matching with the Department of Veterans Affairs (VA), but had yet to do so for borrowers identitied through data matching with SSA, encompassing a much larger set of borrowers.  

"Focusing debt forgiveness on our most vulnerable populations is exactly the type policy we need from the Administration.  If the federal government is already in possession of data that will fast track borrowers receiving their benefits, figuring out how FSA can get access to that information for automatic loan relief must be a top priority," said NASFAA President Justin Draeger. "We applaud FSA for operationalizing this benefit, and making it permanent. We hope this sets a strong precedent for doing the same for other borrower populations."

In March, ED announced it was temporarily suspending some of the burdensome paperwork requirements during the pandemic for borrowers with TPD, a move that will now be permanent. It also retroactively applied those changes to more than 41,000 borrowers, clearing roughly $1.3 billion worth of student debt.

Thursday’s move was the latest in a series of actions by ED under the Biden administration to issue targeted debt relief for borrowers. In total, the administration has approved approximately $8.7 billion in student loan discharges for more than 450,000 borrowers, the department noted in its announcement. 

Regarding the status of widespread student loan debt forgiveness, ED officials said they are still in the process of working with the White House and the Department of Justice to review the legal authority and are awaiting a memo that will largely determine how the Biden administration proceeds on the issue of debt forgiveness.

 

Publication Date: 8/19/2021


David S | 8/20/2021 10:51:47 AM

It's about time. Elections matter.

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