December 3, 2022


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400,000 Borrowers May Qualify For Student Loan Forgiveness And Not Even Know It

Student loan borrower advocacy organizations filed a formal petition today, calling on the Biden administration to grant automatic forgiveness to hundreds of thousands of disabled student loan borrowers who may not even realize that they qualify for a discharge.

Student Defense, Community Legal Aid Society of Delaware, and Justice in Aging jointly submitted a Rulemaking Petition under Section 553(e) of the Administrative Procedure Act, to pressure the Education Department to streamline the Total & Permanent Disability (TPD) Discharge program. The TPD Discharge program allows student loan borrowers who are unable to maintain substantial, gainful employment due to a medical impairment to get their federal student loans completely forgiven.

To be granted a TPD Discharge, however, disabled student loan borrowers must submit a formal application, which can be a cumbersome process, particularly for borrowers who suffer from severe physical and psychological impairments. The Department of Education has authority to automatically grant a TPD Discharge to disabled student loan borrowers who are receiving Social Security Disability benefits, if they have a disability review period of at least five to seven years. The Social Security Administration has identified approximately 400,000 disabled student loan borrowers who would qualify for relief, and the agency has shared that information with the Department of Education. But, the Department has not acted to cancel the student debt balances of these borrowers. Many borrowers do not even realize that they qualify, and most have not submitted applications.

The petition calls on the Department to use the information it already has regarding the disabled status of these 400,000 borrowers to automatically forgive their student loan debt. In 2019, the Department was able to implement widespread automatic TPD discharges for borrowers identified by the Veteran’s Administration as totally and permanently disabled due to a service-connected disability. Advocates argue that the Department should enact a similar automated discharge system for borrowers determined to be disabled by the Social Security Administration, as well.

“Our petition sets forth the easy steps that the Department of Education can take to promptly provide this life-changing relief to the hundreds of thousands of student loan borrowers with disabilities who qualify for loan discharges and have already been identified by the Department,” said Alex Elson, Student Defense Senior Counsel & Cofounder.  

“I am proud to stand with Student Defense and Community Legal Aid Society of Delaware in taking another critical step to get Americans with total and permanent disabilities the student loan relief they are entitled to by law,” said Senator Chris Coons (D-DE). “I urge the Department of Education to answer the persistent calls of borrowers, advocates, and bipartisan members of Congress to automate the loan discharge process.”

Last month, the Biden administration announced that it was loosening bureaucratic requirements for the TPD discharge program by temporarily waiving post-discharge monitoring periods during the COVID-19 pandemic. To keep their forgiven student loans in a discharged status, most TPD borrowers must submit ongoing annual paperwork for three years following their discharge to certify their disabled status and employment earnings (if any). Failure to respond to the Department of Education’s inquiries can result in the discharged loans being reinstated. The vast majority of student loan disability discharges that get reversed are due to a disabled borrower’s failure to respond to monitoring requests and submit the required paperwork.

The Biden administration’s waiver of the TPD post-discharge monitoring paperwork requirements is retroactive to March of 2020, when the pandemic emergency was first declared. Student loan borrowers who have had their disability discharges reversed due to failure to send in the required paperwork would be eligible to have their loans re-discharged. A total of approximately 230,000 student loan borrowers will be impacted, including 41,000 borrowers who had their discharges reversed. Still, advocates had criticized the administration’s move as insufficient.

Meanwhile, the Biden administration continues to evaluate options for broader student loan forgiveness beyond the TPD discharge program. Earlier this month, the administration announced that attorneys under Education Secretary Miguel Cardona, in conjunction with the Department of Justice, will be exploring potential legal authorities that could be the basis for widespread student loan forgiveness implemented through executive action. It could be weeks or months before a decision is made.

Further Reading

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Biden Excludes Student Loan Forgiveness From Budget Proposal, But Calls For More Funding For Higher Ed: Key Details

Key Moments From Elizabeth Warren’s Blockbuster Hearing On Student Loans

4 Key Questions About Biden’s Student Loan Forgiveness Review

Biden To Initiate Additional Student Loan Relief This Week — But Borrowers Demand Full Cancellation

72,000 Borrowers Will Get $1 Billion In Student Loan Forgiveness – Do You Qualify?

Is $10,000 In Student Loan Forgiveness Next, After Biden Administration Cancels $1 Billion?

Senate Passes Stimulus Bill With Student Loan Tax Relief — Will It “Pave The Way” To Cancel Student Debt?

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Whether Biden Cancels Student Debt Will Depend On These 3 Things

Could These Student Loan Borrowers Be Excluded From Biden’s Forgiveness?