The Department of Education has announced that 323,000 individuals who have a total and permanent disability will have their unpaid student loans automatically discharged without having to file any paperwork or applications. The discharges will wipe out $5.8 billion in unpaid loans.
Previously, individuals who had a total and permanent disability (TPD) had to apply in order to receive the relief. Now, the Department of Education will automatically match the Social Security numbers of individuals against a database maintained by the Social Security Administrations. Those individuals who have been identified as TPD by the SSA will have their student loans automatically discharged. Under the application process, only half of the eligible borrowers who have been designated as TPD had received a discharge.
The process will start next month.
“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,” said U.S. Secretary of Education Miguel Cardona in a statement. “From day one, I’ve stressed that the Department of Education is a service agency. We serve students, educators, and families across the country to ensure that educational opportunity is available to all. 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 Department is also proposing to end a three-year income monitoring period to determine whether individuals who have been designated as TPD are making enough money to repay their student loans. The monitoring program has been suspended during the COVID-19 pandemic, but the Department is proposing to eliminate it entirely.
Consumer advocates praised the announcement.
“Make no mistake, the Department’s actions today will provide meaningful relief to hundreds of thousands of borrowers,” said Persis Yu, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, in a statement. “Today’s action will take one step towards fixing a fundamentally broken system, but more still needs to be done. Millions of borrowers are still waiting for President Biden to make good on his promise to provide widespread student loan cancellation.”
Since President Biden took office in January, the Department of Education has now canceled $8.7 billion in unpaid student loans for 455,000 borrowers, according to the department.
