The Education Department will write off $ 5.8 billion in student loans taken out by severely disabled borrowers, the latest in a series of reforms to a struggling program that has left many vulnerable borrowers mired in debts that ‘they couldn’t repay.
A 2011 survey by ProPublica, published in partnership with Columbia University’s Stabile Center for Investigative Journalism, found that a flawed Department of Education program to assess disability was leaving many borrowers struggling. financials because of federal student loans that they were legally allowed to reject.
Under the new regulations, the department will automatically write off debt from borrowers the Social Security Administration has identified as severely disabled. The ministry will also take steps to eliminate a three-year monitoring period after the release of loans, which has led many borrowers with disabilities to have their debts reinstated due to difficulties with paperwork.
âWe have heard loud and clear from borrowers with disabilities and advocates for the need for this change,â US Secretary of Education Miguel Cardona said when the ministry announcement reforms in August. âThis change cuts red tape in an effort to simplify processes as much as possible for borrowers who need help. “
Our survey ten years ago found that bureaucratic hurdles often prevented borrowers from getting their loans canceled. In one case, a borrower in vegetative state was in default for failing to provide the department with an income verification. The department had ignored internal recommendations to completely abandon its dysfunctional review process and accept the Social Security Administration’s findings of invalidity.
A few weeks after the article was published, the ministry announced the first in a series of reforms, pledging to write new rules to revamp the program. In 2012, the ministry agreed to recognize certain findings of Social Security invalidity. And in 2016, he sent letters urging around 387,000 borrowers with Social Security designations to file a simplified application form for debt relief.
The department’s latest decision goes much further: it automatically discharges the debts of borrowers that the SSA has determined to be totally invalid. The ministry will identify these borrowers through data matching rather than requiring them to file applications.
âProviding this relief automatically is a huge deal,â said Persis Yu, director of the National Consumer Law Center’s Student Loan Assistance Project. âWarning people is not enough. “
Yu said issues such as outdated mailing addresses, as well as the difficulties many people with disabilities face in completing the application process, meant that the majority of eligible borrowers did not get the relief they were entitled to.
Of the more than 800,000 borrowers identified in social security data as eligible for relief, only around 300,000 had obtained it, according to a recent report. report by Yahoo! Finance. The department said the total number contained duplicates and estimated that an additional 323,000 borrowers will have their debts canceled under the new policy.
The other key element of the new reform is that the government will no longer require borrowers to prove that they are not earning income in order to keep the cancellation of the loan. In October, it will begin drafting new regulations to eliminate a three-year monitoring period that is currently required after release approval.
A 2016 report by the Government Accountability Office found that 98% of the loan reinstatements canceled during the monitoring period occurred because borrowers failed to submit documents, not because their income was too high.
The latest reforms will not completely eliminate the ministry’s disability review program.
Borrowers who have not applied for or received Social Security disability benefits will not be covered by data matching. Of those receiving disability benefits, only those with the most severe type of disability finding – Unexpected medical improvement – will receive automatic relief.
Scott Creighton, a former carpenter and draftsman who suffers from chronic obstructive pulmonary disease, falls outside this category. ProPublica examined Creighton’s case in its initial investigation. The Education Department had seized Creighton’s Social Security benefits to pay off decades-old student debt.
Creighton made several attempts over the following years to return to work, but his medical condition made it impossible. At a job, he said, his leg would swell after the hour-long commute to work.
âThere is no improvement in COPD,â Creighton said. “Since I last spoke to you, I have had a pulmonary embolism and had a heart attack.”
In March 2018, an administrative law judge ruled that Creighton remained disabled, but was covered by a less severe designation called Medical Improvement Expected. The Education Department no longer tries to collect its loans, Creighton said. But he fears they will resume if he tries to return to work again.
The new automatic remittance cycle will only cover borrowers who the SSA says are not expected to improve. Since 2019, people with total disability from the Department of Veterans Affairs have also benefited from an automatic stay. Everyone else has to go to the Ministry of Education if they want their loans canceled.
âThis group of borrowers will still have to jump through bureaucratic hoopsâ to get relief, said Yu of the National Consumer Law Center.
“It’s a really important development for people that it’s going to have an impact,” she added. “But there is still more to do.”