Department of Education Cancels $ 5.8 Billion Loans for Disabled Borrowers

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TO CLAR LOMBARDO

U.S. Department of Education announced on Thursday that it will repay the outstanding student loans of more than 323,000 borrowers who have severe, permanent disabilities, and will remove barriers to borrowers who are eligible for this benefit in the future. The announcement will write off about $ 5.8 billion in debt and mark a significant step towards fixing a troubled debt relief program designed to help borrowers with disabilities.

NPR reporting over the past two years showed that part of suitable borrowers receive the benefits to which they are eligible under the federal disability discharge program that began in 1965. In fact, many borrowers did not know at all that they were entitled to do so.

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“Today’s measures remove a major barrier that has prevented too many borrowers with disabilities from receiving the full and permanent disability benefits to which they are entitled by law,” said US Education Secretary Miguel Cardona.

The program is designed to pay off student loan debt for Americans who are no longer able to work due to significant disabilities. But until now, borrowers who were eligible for the program had to apply for the benefit.

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The relief will now be automatic for those identified by matching data with the Social Security Administration. The next match will take place in September, and based on those identified in June, the department expects more than 323,000 people to receive $ 5.8 billion in aid.

The department also said it would propose removing a significant hurdle for those borrowers who were approved to repay loans: a three-year income monitoring period, during which many people saw their loans recovered through no fault of their own.

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The agency said it would permanently stop sending these borrowers requests for income information during this period – a decision that was temporarily made during the pandemic – and intend to completely abandon the monitoring period during the upcoming agreed adoption of the rules.

Borrowers and advocates see this step as the first step towards fixing the discharge program. “This is a huge deal for the hundreds of thousands of borrowers who are eligible for this assistance, and to be honest, it’s long overdue,” said Persis Yu, a staff attorney for the National Consumer Rights Advocacy Center.

But “we also hope that the department will consider the eligibility criteria it uses to determine if someone has a disability statement,” Yu added, saying that some borrowers with disabilities who should receive loan payments are not listed in the match of the Social Security Administration.

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