Borrowers who received a disability-related discharge of their federal student loans won’t be forced to resume repayment during the COVID-19 pandemic, the Department of Education announced Monday — an action that falls short of relief advocates were hoping the Biden administration would deliver to disabled borrowers.
The announcement will affect more than 230,000 borrowers, the agency said.
These borrowers had previously had their loans discharged through a process that allows borrowers to have their debt wiped away in cases where they’re totally and permanently disabled. To avoid having their loans reinstated, these borrowers were required to submit annual documentation for three years verifying their income.
Now, these borrowers won’t be subject to income monitoring during the COVID-19 emergency, the Department said. In addition, the more than 41,000 borrowers who already had $1.3 billion in loans reinstated during the pandemic will have their loan discharges reinstated and will be refunded any payments they made during the pandemic period.
“Borrowers with total and permanent disabilities should focus on their well-being, not put their health on the line to submit earnings information during the COVID-19 emergency,” Miguel Cardona, the Secretary of Education, said in a statement.
The announcement is the latest in a series of tweaks officials have made to the total and permanent disability discharge program over the past several years. During that time, advocates have called on the Department to overhaul the program, which is notoriously difficult for borrowers to access.
The fact that 41,000 disabled borrowers had their loans turned back on during the pandemic, is “shocking,” and an indication of how challenging it is for these borrowers to access the relief they’re entitled to, said Persis Yu, the director of the Student Loan Borrower Assistance Project at the National Consumer Law Center.
“This isn’t an announcement, it’s a confession,” she said.
Yu added that the implication that the Department will turn the income-monitoring requirement back on after the pandemic is “unacceptable.” A 2016 Government Accountability Office report found that 98% of disabled borrowers who had their debts reinstated didn’t have incomes that were too high to qualify, instead it was because the borrowers didn’t submit the documentation.
“They’re making people work way too hard for their relief and this action today is woefully insufficient to solve any of those problems,” she said.
In the weeks leading up to President Joe Biden’s inauguration, multiple student-loan borrower advocacy groups upped the pressure on the incoming administration to provide relief to disabled borrowers. They identified wiping away the debt of borrowers who the government knew qualified for a total and permanent disability discharge, but hadn’t received it, as an action the administration could take early in its tenure.
“Let’s be clear: today’s announcement is not a victory for students,” Alex Elson, senior counsel at the National Student Legal Defense Network, said in a statement. His organization called on the Biden administration to cancel the debt of borrowers who the government knows qualify for total and permanent disability discharge in its first 100 days.
“There are roughly 400,000 borrowers with disabilities who the Social Security Administration has already determined are legally owed debt relief. The Department of Education knows exactly who they are but is choosing to do nothing for them,” the statement reads.
Elson added that his organization is exploring legal options to get disabled borrowers the relief to which they’re entitled.
A senior Department official indicated that the agency may take steps in the future that go further in providing relief to disabled borrowers.
“We think there are a host of improvements that could be made in this program and we’re exploring what options we have to make those improvements,” the official said.
Though borrowers have the right to have their debt discharged if they have physical or mental disability that has lasted five years, will last more than five years or will result in death, actually receiving the discharge can be challenging.
Borrowers typically have to apply to have the debt wiped away and lawsuits and other evidence indicate that even in cases where borrowers tell a student-loan company or debt collector that they’re disabled, the companies don’t provide them with information about the discharge process.
The consequences of still holding the debt can be harsh for these borrowers. In 2015, the government garnished the benefits of nearly 114,000 borrowers over 50; of those, more than half were receiving Social Security disability benefits, not Social Security retirement benefits, according to a 2016 report from the Government Accountability Office.
In 2019, the Trump-era Department of Education began automatically cancelling the debt of borrowers who were identified as eligible by the Department of Veterans affairs.
In 2016, under the Obama administration, the Department of Education and the Social Security administration started an information-sharing agreement, which allowed the Department access to lists of borrowers who would qualify for relief based on their Social Security disability status. The agency sends these borrowers letters informing them of their eligibility for the program, but the letters aren’t enough for the borrowers to actually access relief.
As of November 2019, the Department had sent notices to 571,527 borrowers through this SSA data match, according to documents obtained by the National Student Legal Defense Network. But of those borrowers, 353,445, or roughly 60% hadn’t received the discharge to which they were entitled.
The senior Department official said taking the steps to allow borrowers who have been identified as eligible through the Social Security data match to have their debt automatically discharged “are under consideration.” They include a rule-making effort and changes to the data-matching agreement with the Social Security administration, processes which “take some time,” the official said.
“We are continuing to look at what else we can do here,” the official said.
The challenges disabled borrowers face in accessing relief are another indication of why broad-based student-debt cancellation is necessary, Yu said. The Biden administration has been facing pressure from activists, advocates and Democratic senators to cancel tens of thousands of dollars in student debt per borrower.
“This is just another example of the system failing, this is another example of the student-loan system being designed to get relief to vulnerable borrowers and failing miserably,” Yu said. “When you get [relief] to everybody, you know that the people who need it will get it.”