Education Department Cancels Student Loan Debt for Over 40,000 With Disabilities

Two weeks after canceling student debt for around 72,000 defrauded borrowers, Department of Education Secretary Miguel Cardona announced on Monday the relief measures for borrowers with total and permanent disabilities.

Under the previous rule imposed under the administration of former President Barrack Obama, if an individual will be determined by a physician, the Social Security Administration, or the Department of Veteran Affairs as permanently disabled, the individual would be eligible for federal student debts cancelation.

There were documents required that need to be submitted within a three-year monitoring period as it would serve as verification of their incomes that did not exceed the poverty line. Now, the said requirements were waived by the Education Department, The Washington Post reported.

According to Business Insider, the Education Department noted that the move would help more than 230,000 borrowers. The 41,000 individuals who had $1.3 billion of loans in total will no longer repay their loans as they will no longer have a further obligation to pay the student debt and be refunded on any payment they have made during the pandemic. Also, the other 190,000 borrowers would not be asked to submit any earnings documentation.

Miguel Cardona emphasized in a statement that borrowers with permanent disabilities should focus on their overall well-being and should not put their health on the line just to submit earnings information in the middle of the pandemic.

Miguel Cardona also noted that by waiving all of the requirements, the government could ensure that no borrower who is totally and permanently disabled risks having to repay their loans simply because they could not submit paperwork.

In a 2016 report from the Government Accountability Office, they have found out that 98 percent of reinstated disability discharges occurred because borrowers were not able to submit the required documentation and not because their incomes were too high.

The Education Department noted that eligible borrowers would start to see their loans return to a discharge status in the next few weeks. The Education Department is considering further changes for how it monitors borrowers' earnings with total and permanent disabilities.

Despite the fact that the rule change on student debts is welcome news for borrowers with disabilities struggling to pay off their debt, some experts said it is still not enough as there is a need to address the root cause of the problem.

Previous Investigation

An investigation in 2019 by the NPR found that only 28 percent of eligible borrowers were getting the debt relief they were entitled to.

Starting from March 2016 until September 2019, 75,000 individuals among 200,000 borrowers failed out of their programs due to failure of submission and had their debt reinstated, NPR reported.

Lawmakers earlier urged the Trump administration to automatically discharge the student debts with permanent disabilities, but it did not happen.

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