The Department of Education announced Thursday that more than 323,000 full and permanent disability student loan borrowers will automatically repay their debts, resulting in more than $ 5.8 billion in disbursements.
The announcement came after years of pressure that has swept across several administrations to make it easier for borrowers with full and permanent disabilities to obtain the loan forgiveness they are legally entitled to.
While borrowers who have a disability that prevent them from working are eligible to have their loans canceled, they generally have to go through an application process that includes providing proof of their disability, which can be difficult to navigate.
In some cases, borrowers with disabilities who received a safety disability allowance decorated the outstanding student loans were not informed of their eligibility for loan repayment by the government.
“This process will be smooth for our borrowers, they won’t have to apply for it and get bogged down in paperwork.”
“This process will be smooth for our borrowers, they will not have to apply for it and get bogged down in paperwork,” Education Minister Miguel Cardona said of the $ 5.8 billion in aid at the conference. Call journalists. “This is consistent with our strategy from day one, in which our borrowers should be the focus of attention.”
Rather than asking borrowers to raise their hand for a full and permanent disability termination, the Department of Education will link the data to the Social Security Administration, which through its work in administering disability benefits has information that will indicate whether the borrower has a general and permanent disability – for identifying borrowers entitled to a statement.
Borrowers identified during the September match will receive repayment information a few weeks after the match and are due to be paid by the end of the year, the Department said. Borrowers can opt out of the statement. They will not pay federal income tax on debt relief, although there may be some state tax implications.
For years, advocates have urged the Department to use the social security system to automatically write off the debts of those eligible for full and permanent disability layoffs.
Agencies conduct data matching on a quarterly basis, and according to the agency, the arrears of new eligible borrowers, which are identified each time, will be repaid in the future.
For years, defenders have called on The Department uses the social security system to automatically write off the debt of individuals who are eligible for a full and permanent disability statement. Recently bipartisan group of legislators wrote to the Department urging them to take this step.
In 2016, the Obama administration began using match to notify eligible borrowers to write off the debt, but they were unable to automatically cancel their loans. In 2019, the Trump administration used data matching with the Office of Veterans Affairs on the automatic cancellation of the debt of veterans with full and permanent disabilities.
As part of Thursday’s announcement, Department officials also said they plan to propose removing the three-year income monitoring requirement that borrowers who have received permanent and permanent disability through any process other than VA are usually subject to. The agency has already announced that it plans to extend the policy indefinitely. announced in March stop asking these borrowers for income information.
If borrowers do not respond to these requests, their loans can be recovered. Accounts Chamber of Government 2016 The report showed that 98% disabled borrowers who had their debts recovered did not have incomes that were too high to meet the criteria, instead it was due to borrowers not submitting documentation.
Pressure to solve problems
The announcement Thursday came as the Biden administration is facing pressure to address the challenges facing the student loan system on many fronts. Defenders called on the administration must remedy the problems faced by other programs in which borrowers are eligible for assistance but cannot access it, including an initiative for government officials and debt cancellation for borrowers who have been defrauded by their schools, prior to the suspension of student loan payments, and fees rise at the end of January.
“We are actively working to improve the forgiveness of government services loans and the protection of borrowers,” Cardona said during a conversation with reporters. “We will constantly look for ways to support our borrowers, we heard from them, we heard that when they are eligible for a discharge, we should not create obstacles to their receipt.”
The agency has canceled more than $ 1.5 billion into loans owned by defrauded students, but lawyers and legislators urge them to do more so-called targeted debt cancellation, as well as to seek some kind of massive debt cancellation. The White House said it looks at legal authority of the president to cancel student debt.
“This process is still ongoing,” Cardona said over the phone. “We are in talks with the White House and the Justice Department.”