Student loan forgiveness: Biden administration move for disabled borrowers was ‘the bare minimum,’ advocacy group says

·5 min read

This story has been updated to include comment from the Education Department.

Advocacy groups are calling on the Education Department (ED) to forgive $8 billion in student debt held by nearly 518,000 borrowers who are totally and permanently disabled.

The groups sent a letter to Education Secretary Miguel Cardona on Friday morning, stating that the department's existing regulations "unnecessarily prevent qualifying borrowers from accessing and maintaining loan cancellation."

The groups also strongly urged ED to amend the Total and Permanent Disability (TPD) regulations "to automatically discharge debt for all known eligible student borrowers with total and permanent disabilities."

ED recently discharged student debt for 41,000 borrowers who had been previously approved for debt relief but had their loans reinstated amid the pandemic. ED also waived paperwork for an additional 190,000 borrowers. 

“When they announced that they were going to be doing a big announcement on TPD, we thought that there would be something meaningful there," Alex Elson, senior counsel at the National Student Legal Defense Network, which was among the groups that sent the letter, told Yahoo Finance. "And this 40,000 announcement was really just the bare minimum — at the fringes."

In response to the story, an ED spokesperson told Yahoo Finance that the agency was "in strong agreement with the need to make the total and permanent disability discharge program more efficient and usable for borrowers."

They reiterated the action they took with the 41,000 borrowers and added: "We recently announced plans to include total and permanent disability discharges in our upcoming rulemaking and believe there are opportunities for additional actions before that process concludes."

US President Joe Biden walks along the boardwalk during the G7 summit in Carbis Bay, Cornwall, south-west England on June 11, 2021. (Photo by PHIL NOBLE / POOL / AFP) (Photo by PHIL NOBLE/POOL/AFP via Getty Images)
US President Joe Biden walks along the boardwalk during the G7 summit in Carbis Bay, Cornwall, south-west England on June 11, 2021. (Photo by PHIL NOBLE / POOL / AFP)

As of April 2021, there are about 818,000 student debtors with total and permanent disabilities who have been identified by government agencies for debt discharge since 2016, according to a freedom of information (FOIA) request filed by Student Defense and provided to Yahoo Finance.

A little over 300,000 of those student debtors have had $8.8 billion in student debt discharged since 2016 while nearly 518,000 borrowers — holding $8 billion in debt — are still waiting for relief. 

"It is truly a travesty that the U.S. Department of Education knows of hundreds of thousands of borrowers with disabilities who are entitled to have their federal student loans cancelled and yet it has failed to take the necessary steps to provide borrowers with this vital relief," Persis Yu, director of the student loan borrower assistance project at the National Consumer Law Center, told Yahoo Finance. "Many of these borrowers are in default on their loans and will be vulnerable to the Department’s harsh collection tactics when the payment suspension ends even though they should not even owe the debt."

NEW HAVEN, CT - MARCH 26: (L-R)) U.S. Vice President Kamala Harris and Secretary of Education Miguel Cardona lead a roundtable session about reducing childhood poverty at the Boys and Girls Club of New Haven on March 26, 2021 in New Haven, Connecticut. Harris is traveling to New Haven, Connecticut to promote the Biden administration's recently passed $1.9 billion federal stimulus package. (Photo by Drew Angerer/Getty Images)
U.S. Vice President Kamala Harris and Secretary of Education Miguel Cardona lead a roundtable session about reducing childhood poverty at the Boys and Girls Club of New Haven on March 26, 2021 in New Haven, Connecticut. (Photo by Drew Angerer/Getty Images)

'It was really an abomination to have reinstated student loans during the pandemic'

Historically, federal loan borrowers with TPD can obtain debt relief through a process created by Congress in 1965

Under a program set up by the Obama administration, the Social Security Administration (SSA) would determine borrowers' eligibility, and they could apply (or opt-in) for debt relief. If they're successful, they'd be subject to a three-year monitoring period.

Since the start of the SSA collaboration, 818,074 borrowers had been identified as eligible for a TPD discharge. 300,405 were granted $8.8 billion, but the process has stalled for 517,669 others. 

"The Department’s red tape is preventing hundreds of thousands of borrowers with disabilities from receiving the relief they are entitled to under the law," the new letter stated. "Failing to amend the regulations and provide relief before the student loan payment freeze expires on September 30, 2021 will cause significant financial harm to these hundreds of thousands of borrowers."

President Trump made the process even smoother for some when he signed an executive order in 2019 that called on ED to notify more than 25,000 veterans who had been deemed by Veterans Affairs to qualify for total and permanent disability discharge of their eligibility for cancellation. The order also automated the process, and now veterans aren't subject to the 3-year monitoring period.

U.S. President Donald Trump holds an executive order relieving qualified disabled veterans of federally held student loan debt after speaking at the AMVETS (American Veterans) National Convention in Louisville, Kentucky. U.S., August 21, 2019.   REUTERS/Bryan Woolston
U.S. President Donald Trump holds an executive order relieving qualified disabled veterans of federally held student loan debt after speaking at the AMVETS (American Veterans) National Convention in Louisville, Kentucky. U.S., August 21, 2019. REUTERS/Bryan Woolston

Elson noted at the Trump administration "gave debt relief automatically to the veterans but never did that debt relief get extended to the ordinary citizens who are entitled to it under the Social Security Administration's matching process." 

According to ED's existing arrangement with SSA, the 518,000 were identified as those who are in the "Medical Improvement Not Expected (MINE)" category.

"To be placed in the MINE category indicates that the person has a long-term, extremely work-limiting disability that is very unlikely to medically improve," one study of the TPD program stated.

"The department has the list of people who are entitled to [relief], but they're not giving it to them," Elson stressed.

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Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.

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