Loans from severely disabled people must be canceled
WASHINGTON (AP) – The Biden administration announced Thursday that it would automatically write off the student loan debt of more than 300,000 severely disabled Americans who keep them from earning significant incomes.
The move will erase more than $ 5.8 billion in debt, according to the Education Department, and marks the start of a broader overhaul of a program that has been criticized for its overly onerous rules.
“We have heard loud and clear from borrowers with disabilities and advocates of the need for this change and we are delighted to act on it,” Education Secretary Miguel Cardona said in a statement.
The federal government offers student debt relief to people “totally and permanently disabled” and with limited income. But the current rules require them to present documents proving their disability and to undergo a three-year monitoring period to prove that they are earning little wages.
Tens of thousands of people have been kicked out of the program and their loans have been reinstated simply because they failed to provide proof of their income, and critics say the complex rules deter some from applying.
Advocates urged the education ministry to completely eliminate the surveillance period and provide automatic debt relief to people the Social Security Administration already identifies as permanently disabled.
Under the new action, both demands will be met. Beginning in September, the Department of Education will begin to write off the student debt of 323,000 Americans identified in Social Security records as permanently disabled.
As students across the country graduate with massive debt, advocates display a hand-painted sign on the ellipse outside the White House calling on President Joe Biden to sign an executive order to cancel student debt on the 1st. June.
Borrowers will be notified once they have been approved for relief. All loans are expected to be paid by the end of the year.
The ministry also plans to eliminate the program’s three-year surveillance period, which was previously suspended during the pandemic. This change should be cemented during a federal rule-making process set to begin in October, the agency said.
“It will be a smooth process for our borrowers,” Cardona said on a call with reporters. “They won’t have to apply for it or get bogged down in paperwork.”
Defenders celebrated the change as a victory. Aaron Ament, president of the National Student Legal Defense Network, called this step a “life changing”.
“This is a huge time for the hundreds of thousands of borrowers with disabilities who can now take charge of their lives and will not be trapped in a cycle of debt,” he said.
The program has been under intense scrutiny since 2016, when a federal watchdog agency discovered that the tax filing process was a barrier for borrowers. In 98% of the cases where loans were restored, it was because borrowers failed to submit documents, and not because their income was too high, the US Government Accountability Office reported.
The Trump administration began granting automatic loan cancellations to eligible military veterans in 2019, but the move did not apply to hundreds of thousands of other Americans with disabilities.
In March, the Education Department canceled the debt of more than 40,000 borrowers whose debt had been restored due to paperwork issues, but said further changes would need to go through a process of developing debt. federal rules.
Cardona announced the change as the White House faces increasing pressure to pursue broader debt relief.
Democrats, including Senate Majority Leader Chuck Schumer, NY, and Senator Elizabeth Warren, Mass., Have called on Biden to write off $ 50,000 in student debt for all borrowers to get the economy going.
Biden asked the Education and Justice Departments to assess the legality of the massive debt cancellation. Cardona said on Thursday those conversations were “still ongoing”. Meanwhile, he said, his agency is working to improve other debt cancellation programs that target specific groups of borrowers.
“This is an effort to show that we are working to improve targeted loan relief and help our borrowers,” he said.