Economy Education

U.S. Education Department Cancels $5.8 Billion in Student Loans for Borrowers with Permanent Disabilities

On Thursday, the Education Department announced that over 323,000 borrowers who have permanent disabilities will automatically receive federal student loan forgiveness, amounting to a total of $5.8 billion in canceled student loan debt.

The federal student loan forgiveness process for borrowers who cannot work due to permanent disabilities will now be automated. Borrowers declared permanently disabled by a doctor, the Department of Veterans Affairs, or the Social Security Administration (SSA) will be automatically identified by an SSA data match to have their loans forgiven.

“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,” said U.S. Secretary of Education Miguel Cardona in a statement.

“From day one, I’ve stressed that the Department of Education is a service agency. We serve students, educators, and families across the country to ensure that educational opportunity is available to all. We’ve heard loud and clear from borrowers with disabilities and advocates about the need for this change and we are excited to follow through on it. This change reduces red tape with the aim of making processes as simple as possible for borrowers who need support.”

Before this announcement, borrowers with permanent disabilities were still entitled to have their student loans discharged, but they were required to apply for the debt relief. Additionally, the program was not well-known, so few borrowers with permanent disabilities even knew they were eligible to apply, let alone took advantage of the program. According to NPR, between 2016 and 2019, only 28 percent of borrowers eligible for debt relief had their loans discharged.

Now that the process is automated, more eligible borrowers will be able to have their federal student loans canceled efficiently. The change will go into effect in September.

“This is a life-altering announcement for hundreds of thousands of student loan borrowers with disabilities,” said National Student Legal Defense Network Vice President and Chief Counsel Dan Zibel in a statement.

“We have long been calling on the Department to take this step and eliminate unnecessary red tape that has kept too many people caught in a cycle of debt. Today’s step is another indication that the Department is listening to the voices of student loan borrowers.”

Sources: U.S. Department of Education 8/19/21; Washington Post 8/19/21; CNN 8/19/21; NPR 8/19/21; NPR 12/4/19; National Student Legal Defense Network 8/19/21

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