The Department of Education will forgive $ 5.8 billion in student loans for seriously disabled borrowers, the latest in a series of reforms to a troubled program that has left many vulnerable borrowers mired in debt they could not repay.
2011 r. the study by ProPublica, published in partnership with Columbia University’s Stable Center for Investigative Journalism, found that the Department of Education’s flawed disability assessment program left many borrowers in financial hardship due to federal student loans they were legally entitled to.
Under the new regulation, the department automatically forgives debts of borrowers that the Social Security Administration has identified as disabled. The department also intends to cancel the three-year post-loan monitoring period that has forced many borrowers with disabilities to recover their debts due to paperwork difficulties.
“We have heard clearly and clearly from borrowers with disabilities and advocates of the need for this change,” said US Education Secretary Miguel Cardona when the ministry announced reforms in August. “This change reduces red tape to make it as easy as possible for borrowers who need support.”
Our investigation ten years ago showed that bureaucratic hurdles often prevent borrowers from obtaining loan forgiveness. In one case vegetative borrower was declared default for failing to provide the department with proof of income. The department ignored internal recommendations to completely abandon its dysfunctional screening process and accept disability findings from the Social Security Administration.
A few weeks after the article was published, the department announced the first in a series of reforms, pledge write new rules for updating the program. In 2012, the department agreed recognize some of the findings of the social security service on disability. And in 2016 sent out letters inviting approximately 387,000 social security borrowers to submit a simplified debt relief application form.
The department’s final step goes much further: it automatically pays off debts of borrowers that SSA has identified as completely disabled. The Department will identify these borrowers by collating the data instead of requiring them to submit applications.
“Providing this assistance automatically is a huge deal,” said Persis Yu, director of the Student Borrower Assistance Project at the National Center for Consumer Law. “Notifying people is not enough.”
Yu said issues such as outdated mailing addresses, as well as the difficulties many people with disabilities face when filling out an application, mean that most eligible borrowers did not receive the assistance they were entitled to.
Of the more than 800,000 eligible borrowers identified on Social Security data, only about 300,000 received assistance, according to a recent study. report from Yahoo! Finance. The department said there are several duplicates in the total, and it was estimated that another 323,000 borrowers will be written off from debt in accordance with the new policy.
Another key element of the new reform is that the government will no longer force borrowers to prove they are not receiving income in order to maintain loan forgiveness. In October, it will begin writing new rules abolishing the three-year monitoring period currently required following the approval of discharges.
2016 year report The Government Audit Office found that 98% of the recovery of repaid loans during the monitoring period was due to the fact that borrowers did not submit documents, and not because of too high income.
Recent reforms will not completely abolish the disability screening program.
Eligibility does not apply to borrowers who have not applied for or received disability benefits. Of those who do receive disability benefits, only those with the most severe disabilities — not expected to improve in health — will receive automatic benefits.
Scott Creighton, a former carpenter and draftsman with chronic obstructive pulmonary disease, remains outside this category. ProPublica investigated the Creighton case during its initial investigation. The Department of Education received Creighton’s Social Security benefits to pay off multi-year student debt.
In subsequent years, Creighton tried several times to return to work, but his health condition made it impossible. According to him, at one job his leg was swollen after an hour’s trip to work.
“There is no improvement in COPD,” Creighton said. “Since the last time I spoke to you, I have had one pulmonary embolism and one heart attack.”
In March 2018, an ALJ ruled that Creighton remained disabled, but fell under a less severe definition called Medical Improvement Pending. Creighton said the Department of Education is no longer trying to get his loans. But he worries that they will resume if he tries to get back to work again.
The new round of automatic forgiveness will only affect those borrowers who, according to the SSA, will not get better. From 2019, automatically receive a grace period for persons with a full disability diagnosis from the Department of Veterans Affairs. Everyone else must contact the Department of Education if they want their loans to be canceled.
“This group of borrowers will still have to jump through bureaucratic hoops to get relief,” said Yu of the National Consumer Rights Advocacy Center.
“This is a really important event for people to be influenced by it,” she added. “But there is still a lot to be done.”
This story was first published on September 1, 2021 on the ProPublica website.…