In Special Needs

The federal government has determined that tens of thousands of people with disabilities are eligible to have their student loan debt discharged, but due to the burdensome process involved, only a fraction of these borrowers have had their debts erased. Student loan officials from seven states and the District of Columbia are now calling on the federal government to automatically discharge the debt of all eligible borrowers.

Student loans are more difficult to discharge than practically any other type of loan. Under the Higher Education Act of 1965, student loans can only be discharged in two circumstances: upon the borrower’s death, or upon a finding that the borrower has a “total and permanent” disability.

To qualify as having a “total and permanent” disability, the borrower must have a “physical or mental impairment that will result in death or has lasted or will be expected to last more than 60 months.” This is a significantly higher standard than even what is required for a person to obtain Social Security Disability Insurance or Supplemental Security Income benefits.

The U.S. Department of Education (DOE) and the Social Security Administration (SSA) send notices to borrowers who may meet the “total and permanent” disability standard. However, the burden is on the borrowers to then affirmatively apply for student loan forgiveness.

In the letter, sent to the heads of the DOE and SSA, eight Student Loan Ombudspersons allege that more than 53,000 people in their jurisdictions have received notices that they may be eligible to have their federal student loans forgiven. However, due to the cumbersome application process, fewer than 10 percent of these borrowers have had their student debt successfully erased.  In fact, thousands who are potentially eligible are being subject to forced collection on their loans.

As a remedy, the Ombudspersons urge the DOE and SSA to adopt an automatic process for discharging student loans when eligible borrowers are identified. In August 2019, the DOE adopted such a process with the Department of Veterans of Affairs. As a result, more than 25,000 veterans with service-related disabilities will have their student loans automatically discharged.

“For the [total and permanent disability] discharge to bring its intended relief to disabled borrowers, the Department must take every step possible on behalf of qualifying borrowers and must proactively reduce the number of steps these borrowers must take themselves,” the letter states.

The full letter can be read here.

For more on the challenges faced by borrowers with disabilities trying to have their student loans discharged, click here to read an investigation by ProPublica.

For information on how a person with disabilities can get a student loan discharged, click here.

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