The move marks the beginning of an extensive overhaul of the program, which has been criticized for repaying more than $ 5.8 billion in debt and overly onerous rules, according to the Education Department.
In a statement, Education Minister Miguel Cardona said: “We have heard loudly and clearly from borrowers with disabilities about the need for this change and are happy to implement it.”
The federal government provides student debt relief to people who are “completely and permanently disabled” and have limited income. However, current regulations require you to file a disability document and prove that your income is low after a three-year observation period.
However, tens of thousands of people withdrew from the program and the loan was renewed only because they did not provide proof of income. Critics say complex rules discourage enforcement.
Supporters are urging the Department of Education to abolish the observation period altogether and provide automatic debt relief to those already identified by the Social Security Administration as having permanent disabilities.
The new action will meet both requirements. Beginning in September, the Department of Education will begin writing off the debts of 323,000 US students that are listed as permanently disabled on social security records.
The borrower will be notified when the compensation is approved. All loans will be repaid by the end of the year.
The agency also plans to cancel the three-year monitoring period for programs that were previously suspended during the pandemic. The changes are expected to be consolidated during the federal rule-making process, which is due to begin in October, officials said.
“It will be a smooth process for borrowers,” Cardona said in a telephone conversation with reporters. “They don’t have to apply or get caught up in paperwork.”
Supporters celebrated this change as a victory. Aaron Ament, president of the National Student Advocacy Network, called the move “life-changing.”
“This is an important moment for the hundreds of thousands of disabled borrowers who can now get on with their lives and are not affected by the debt cycle,” he said.
The program has been under scrutiny since 2016, when federal observers found the income reporting process to be an obstacle for borrowers. The US Government Audit Office reported that 98% of loan collection cases were caused by the refusal of the borrower to apply, and not by too high income.
The Trump administration began allowing qualified veterans to cancel automatic loans in 2019, but the move has not affected hundreds of thousands of other Americans with disabilities.
In March, the Department of Education wrote off the debts of more than 40,000 borrowers that had been recovered due to paperwork problems, but indicated that further changes were needed as part of the federal rule-making process.
Cardona announced the change as the White House faces mounting pressure to seek broader debt forgiveness.
Democrats, including New York Senate Leader Chuck Schumer and Massachusetts Senator Elizabeth Warren, have called on Biden to write off a $ 50,000 student debt to all borrowers to revive the economy. ..
Biden asked the Department of Education and the Judiciary to assess the legality of forgiving large amounts of debt. Cardona said on Thursday that these conversations are “still ongoing.” Meanwhile, his agency said it is working to improve other debt relief programs for certain groups of borrowers.
“This is an attempt to show that we are working to improve targeted loan repayments and help borrowers,” he said.
The aforementioned media player video was used in a previous report.
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Biden’s administration wrote off student loan debt for people with severe disabilities Link to source Biden’s administration wrote off student loan debt for people with severe disabilities