The U.S. Education Department is canceling student debt for more than 40,000 Americans who were previously granted loan forgiveness because of disabilities but later had their debt reinstated after they failed to submit specific paperwork, the agency announced Monday. The action targets a loan forgiveness program that aims to help people with disabilities but that carries burdensome rules. After being granted loan forgiveness, borrowers are required to submit documentation of their earnings for three years. If their payments exceed certain thresholds — or they fail to submit documentation — they’re back on the hook for their loans.
Acknowledging the program’s challenges, the Education Department said it would relax the rules during theand consider other future reporting requirements changes. Until the declares an end to the pandemic, more than 190,000 borrowers in the three-year monitoring period will not be required to submit proof of their earnings, the agency said. Another 41,000 who had forgiveness, amounting to a combined $1.3 billion.
Miguel Cardona said borrowers with disabilities should not “put their health on the line” to submit earnings information. The measure was a disappointment to advocates who have called for a total overhaul of the program. A Washington legal group, Student Defense, said the action helps a . The group has to automatically clear loans for all qualified borrowers and permanently eliminate the monitoring period. Alex Elson, senior counsel for the group, said the new measure “is not a victory for students.”
“There are roughly 400,000 borrowers with disabilities who the Social Security Administration has already determined are legally owed debt relief,” he said. “The Department of Education knows exactly who they are but chooses to do nothing for them.” A senior department official said the agency is exploring permanent changes to the program but that they would have to go through a federal rule-making process that requires months of negotiation. The program was created to help people who are “totally and permanently disabled” and unable to generate significant income.
Borrowers are eligible if they can submit documentation of a mental or physical disability that has continued for at least five years or is expected to last for that long. During the monitoring period, their incomes must not exceed the poverty level for a family of two in their state. The program was scrutinized in 2016 after a reporting rules were a significant hurdle for borrowers. The U.S. Government found that in 98% of cases in which loans were restored, borrowers did not submit the correct paperwork, not because they were earning too much.
In 2019, theveterans who become eligible for the program. Those who have not served in the military must apply for relief. Advocates estimate that nearly 70% of eligible borrowers have not received loan forgiveness and hold an estimated $14 billion in . Calling all HuffPost superfans! Sign up for membership to and help shape HuffPost’s next chapter.