On Thursday, the Biden administration announced that 323,000 debtors would have their federal student loan debt forgiven immediately.
Biden Administration Cancels Student Loans
In a recently published article in The Hill, the government will cancel debtors' federal student loan debt through the Total and Permanent Disability (TPD) discharge program. Student loan borrowers who are unable to sustain significant, gainful work due to a physical or psychological medical disability may have their federal student loans discharged through the TPD Discharge program.
However, handicapped student loan borrowers must file a formal application to have their debts forgiven under the program, which may be difficult for individuals dealing with severe health problems, and many borrowers may not even know they qualify.
Under federal law, student debtors with TPDs may apply for forgiveness of their federal student loans on the basis that they would not be able to repay them. Those with TPDs may be eligible for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), which means the Social Security Administration (SSA) would likely have the information needed to evaluate whether they qualify for student debt forgiveness, according to a published report in Forbes.
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The Education Department Released an Announcement
The Education Department stated that individuals designated as completely and permanently handicapped by the Social Security Administration (SSA) would no longer be eligible to seek for discharge of their federal student debts. Instead, due to a new regulation enabling student loan servicers to connect client data with the SSA, borrowers with TPDs will be eligible for immediate forgiveness.
Secretary of Education Miguel Cardona said in a statement "Today's action removes a major barrier that prevented far too many borrowers with disabilities from receiving the total and permanent disability discharges they are entitled to under the law," according to a published report in The Washington Post.
Furthermore, the Education Department had already negotiated an automatic debt forgiveness agreement with the Department of Veteran Affairs, but the new Thursday regulation will exclude non-veterans with TPDs from the procedure.
Advocates Praised the Recent Action of Biden Administration
Student Defense Vice President and Chief Counsel Dan Zibel in a statement that the Biden Administration's decision to forgive Student Loan is life-changing news for hundreds of thousands of student loan borrowers with disabilities, according to Student Defense Vice President and Chief Counsel Dan Zibel in a statement in a published article in VNExplorer.
They have been urging the Department to take this step for a long time, removing needless red tape that has kept far too many individuals trapped in debt. According to the group, today's action is another sign that the Department is paying attention to student loan borrowers' concerns.
Meanwhile, the Department's move comes as a regulation rewriting process to reform major federal student loan forgiveness and repayment programs, including the TPD Discharge program, which gets underway today. Although final rules may be years away, the revamp may result in substantial changes to these programs.
Persis Yu, director of the National Consumer Law Center's Student Loan Borrower Assistance Project, also said in a statement that they are ecstatic to see the Department of Education finally offer automatic discharges to the hundreds of thousands of handicapped borrowers who have been waiting years for this relief.
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