Biden administration makes it easier to forgive student loans for borrowers with disabilities
Today, the US Department of Education ad efforts to improve the loan forgiveness process for student borrowers with total or permanent disabilities.
Under existing federal law, students who become totally and permanently disabled are eligible for a total and permanent disability leave (TPD), which forgives their federal student debt. But for borrowers with disabilities, asking for forgiveness can be a tedious process, especially for those facing other health issues.
The Biden Administration is looking to lighten some of the burden and make the application process smoother. The Ministry of Education ad that it will suspend all paperwork that borrowers face in order to prove that they continue to have low income for three years after their loan is canceled. The ministry said the measures would help more than 230,000 borrowers with disabilities in total. Part of that effort is to retroactively reinstate more than 41,000 disabled borrowers who failed to submit paperwork. Many organizations have pushed for this, including Veterans Education Success, the American Federation of Teachers, and more.
In August 2019, the The Trump administration announced that it would pay or cancel the federal student debt of totally or permanently disabled veterans. This decision has been said to have an impact on approximately 25,000 disabled veterans. However, he did not do this for other borrowers.
While this is an improvement in the process, some have said it is not enough.
the National Student Legal Defense Network (Student defense) issued a statement blow up the administration. He said, “Let’s be clear: today’s announcement is not a victory for the students. There are approximately 400,000 disabled borrowers who have already been determined by the Social Security Administration to have legal debt relief. Student Defense then asked the Biden administration to automatically pay off the debt of these borrowers.
Defenders have been clamoring for this for years. However, there was a legitimate concern that the rebate would be treated as taxable income.
Bipartisan legislation to address this loophole by exempting canceled loans from federal income tax was ultimately included as a small part of the GOP’s tax reform bill. With this fix, those the same bipartisan lawmakers appealed to the ministry in 2018 to pay off student debt for Americans with disabilities, including veterans. However, the ministry did not act. Today’s announcement is the first step in ensuring that student loan borrowers with disabilities receive the relief they are entitled to under federal law.