U.S. Department of Education announced on Thursday that it will liquidate more than $ 5.8 billion in student debt for more than 323,000 severely disabled borrowers.
“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,” Education Minister Miguel Cardona said Thursday.
“We have heard clearly and clearly from borrowers with disabilities and advocates about the need for this change, and we are happy to implement it,” he added. “This change reduces red tape to make it as easy as possible for borrowers who need support.”
The federal government is offering student debt relief for people who are “completely and permanently disabled” and have limited income, but current regulations require them to submit their disability papers and go through a three-year follow-up period to prove they are earning little. … The move marks the beginning of a broader restructuring of the program, which has been criticized for overly burdensome rules.
“It will be a smooth process for our borrowers,” Secretary of State Cardona told reporters by phone. “They don’t have to apply or get bogged down in paperwork.”
However, tens of thousands of people have been excluded from the program and their loans have been reinstated simply because they did not provide proof of their income, and critics say complex rules are deterring some from applying.
Lawyers have called on the Department of Education to completely abolish the monitoring period and provide automatic cancellation of debts to people who are already identified as disabled by the Social Security Directorate.
Both requirements will be met in accordance with the new promotion. Beginning in September, the Department of Education will begin erasing the student debt of 323,000 Americans who are listed as permanently disabled on Social Security records.
Borrowers will be notified as soon as they are approved for payment of compensation. All loans are expected to be repaid by the end of the year.
The department also plans to cancel the three-year monitoring period for the program, which was previously suspended during the pandemic. The change is expected to be consolidated during the federal rule-making process, which will begin in October, the agency said.
Secretary of State Cardona announced the change as the Biden administration faces mounting pressure to seek broader debt forgiveness.
Current student loan payments on pause until January due to the ongoing COVID-19 pandemic thanks to an extension imposed by the Biden administration last month.
“The pause in payments was a lifeline that allowed millions of Americans to focus on their families, health and finances instead of student loans during a national emergency,” Education Secretary Miguel Cardona said in a statement.
But pressure is increasing on the White House and Democrats in Congress to take action.
Democrats, including Senate Majority Leader Chuck Schumer, New York, and Senator Elizabeth Warren, Massachusetts, have called on Biden to write off a $ 50,000 student debt for all borrowers to boost the economy.
Lawyers such as New York Representative Mondair Jones, who spoke to Spectrum News on this issue, it was said earlier this summer that debt relief would spur the economy and help low-income borrowers. Critics of the loan cancellation argue that it will hurt the federal budget and put taxpayers on the hook for borrowing from others.
When the moratorium on student loans was still due to expire on September 30, polls showed that most borrowers were not ready to start repaying again. BUT Pew Trusts Poll about 1,500 borrowers found that two-thirds said it would be difficult to repay loans. Another student advocate, Student Debt Crisis, found that 86% of borrowers surveyed said the pandemic payment freeze increased their chances of supporting irrevocable cancellation.
Biden asked the education and justice departments to assess the legality of the massive debt write-offs. Secretary of State Cardona said on Thursday that these conversations “are still ongoing.” Department of Education Representative told Spectrum News in July that the check is “in progress.”
Meanwhile, Cardona’s secretary said his agency is working to improve other debt relief programs targeting specific groups of borrowers: “This is an attempt to show that we are working to improve targeted loan write-offs and help our borrowers.”
Austin Landis and the Associated Press of Spectrum News contributed to this report.