Biden Automatically Cancels $ 5.8 Billion Student Loans For Over 300,000 Borrowers

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On Thursday, the Biden administration announced that it will automatically pay off student loan debt for 323,000 borrowers.

The Administration will cancel the federal student loan debt owed by borrowers under the Total and Permanent Disability Statement (TPD) program. The TPD Discharge program allows student loan borrowers who are unable to maintain significant, paid employment due to physical or mental illness, to cancel their federal student loans. However, in order to receive student loan forgiveness under the program, students of student loans with disabilities must submit a formal application, which can be a daunting task for those facing serious health problems.

Advocates have long argued that the Department of Education has the ability and authority to automatically pay TPD payments to student loan borrowers with disabilities who receive disability benefits through Social Security (provided they have a disability screening period of at least five to seven years old). … The Social Security Administration has previously identified hundreds of thousands of student loan borrowers with disabilities who would qualify for a TPD discharge, and the agency shared this information with the Department of Education, but the Department took no action.

That changed completely on Thursday, with the Education Department starting to disburse federal student loans worth about $ 5.8 billion to disabled borrowers. Education Minister Miguel Cardona described the action as “in line with our strategy from day one, which puts our borrowers at the center of the conversation.” The move follows additional efforts by the Biden administration to expand federal student loan forgiveness through existing programs, including recently canceling $ 500 million federal student loans under the Borrower Protection Program to Maturity

Lawyers praised the actions of the administration. “This is a life-changing announcement for hundreds of thousands of student loan borrowers with disabilities,” Vice President of Student Protection and General Counsel Dan Siebel said in a statement. “We have long urged the Department to take this step and eliminate the unnecessary red tape that has left too many people in debt. Today’s move is another indication that the Department is listening to the voices of student loan borrowers. ”

“We are very pleased to see that the Ministry of Education has finally provided automatic benefits to the hundreds of thousands of disabled borrowers who have been eligible for this benefit over the years,” said Persis Yu, director of the Student Borrower Assistance Project at the National Consumer Law Center. in the statement. “This action is long overdue, and it will significantly change the lives of hundreds of thousands of borrowers who are trapped in unnecessary student debt.”

Today’s activities of the Department coincide with the beginning a regulatory change process to revise key federal forgiveness and student loan repayment programs, including the TPD unloading program. The overhaul could lead to significant changes in these programs, although the final rules could emerge years later. “We are also encouraged that the Department of Education is planning to make broader changes as part of the upcoming rulemaking, and we look forward to working with the Department on this rulemaking to remove many of the existing barriers that prevent borrowers with disabilities from getting the help that they have the right under the law, ”said Yu.

Further reading

Biden wants to cancel the “targeted” student loan – but what does that mean?

Biden administration begins revising income-based student loan forgiveness and repayment programs

New details about changes in student loan service emerge: multiple transfers, long-term turmoil expected

Has the Biden administration just sent a big signal to cancel the student loan?

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