- Education Secretary Miguel Cardona canceled student debt for 41,000 borrowers with total and permanent disabilities.
- He also removed the requirement to submit income documentation for over 230,000 borrowers.
- Experts said these changes should have occurred years ago, when borrowers weren’t getting relief.
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After canceling student debt for about 72,000 defrauded borrowers two weeks ago, Education Secretary Miguel Cardona announced relief measures for borrowers with total and permanent disabilities on Monday.
Under the previous rule established under former President Barack Obama, anyone determined as permanently disabled by a physician, the Social Security Administration, or the Dept. of Veteran Affairs was eligible for federal student debt cancelation, with a requirement to submit documentation during a three-year monitoring period to verify that their incomes did not exceed the poverty line. That last part has changed, as Cardona waived the requirement to submit documentation.
According to a press release, this will help more than 230,000 borrowers. Of that total, 41,000 who had $1.3 billion in loans reinstated will get their loans discharged — meaning there’s no further obligation to repay — and get refunded on any payments made during the pandemic. The other 190,000 borrowers won’t be asked to submit any earnings documentation.
“Borrowers with total and permanent disabilities should focus on their well-being, not put their health on the line to submit earnings information during the COVID-19 emergency,” Cardona said in a statement. “Waiving these requirements will ensure no borrower who is totally and permanently disabled risks having to repay their loans simply because they could not submit paperwork.”
A 2016 report from the Government Accountability Office found that 98% of reinstated disability discharges occured because borrowers did not submit the required documentation — not because their incomes were too high.
Eligible borrowers will begin to see their loans return to a discharge status in the coming weeks, the press release said, and the department is considering other future changes for how it monitors the earnings of borrowers with total and permanent disability status.
While this rule change might be welcome news for borrowers with disabilities struggling to pay off their debt, experts say it does not do enough to address the root of the problem.
In 2019, an NPR investigation found that only 28% of eligible borrowers were getting the debt relief they were entitled to, and between March 2016 and September 2019, 75,000 of the 200,000 borrowers who entered the three-year monitoring period failed out of their programs and had their debts reinstated, all because they did not submit the paperwork.
As a result, a bipartisan group of lawmakers in 2019 urged the Trump administration to automatically discharge the loans of total and permanently disabled borrowers, but that didn’t happen.
“Today’s announcement is not cause for celebration but rather for outrage,” Persis Yu, director of the Student Loan Borrower Assistance Project at the National Consumer Law Center, said in a statement. “It is scandalous that the Department revoked the loan discharges for 41,000 borrowers with total and permanent disabilities due to paperwork issues during a pandemic.”