Over 323,000 borrowers who have a total and permanent disability (TPD) will receive more than $5.8 billion in automatic student loan discharges due to a new regulation announced today by the U.S. Department of Education.
On August 19, 2021, the U.S. Department of Education provided loan forgiveness relief to over 323,000 federal student loan borrowers. Of those individuals with disabilities benefitting from this recent change, there was a total of over $5.8 billion in student debt that was canceled. This change applies to student loan borrowers who the Social Security Administration (SSA) has identified as having “total and permanent disability.” This change will be effective beginning September of this year and will also be automatic for the majority of individuals with a TPD.
What Is A TPD Discharge for Student Loan Forgiveness?
A TPD discharge relieves you from having to repay a William D. Ford Federal Direct Loan (Direct Loan) Program loan, Federal Family Education Loan (FFEL) Program loan, and/or Federal Perkins Loan (Perkins Loan) Program loan or complete a TEACH Grant service obligation on the basis of your total and permanent disability.
What Are The New Financial Loan Forgiveness Rules for TPD?
Although this policy was originally rolled out in 2019, there was an application barrier to individuals that resulted in only approximately half of the eligible borrowers receiving the discharge. "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." -- U.S. Secretary of Education Miguel Cardona
We foresee that this new policy will have a beneficial impact on many of our clients who have a TPD, as well as clients receiving Social Security Insurance. Generally, if you are approved for, and currently receiving Social Security Disability Insurance (SSDI) benefits, then you should be automatically identified through an existing data match with the SSA and have any qualifying student debt automatically forgiven.
Can You Lose Your TPD Discharge for Loan Forgiveness?
Under the current regulations, a borrower who receives a TPD discharge through the SSA match, or through the physician’s certification process, is subject to a three-year income monitoring period. Essentially, the monitoring process may cause a borrower to lose their discharge if:
- they simply do not respond to a request for earnings information, or
- their earnings are above a certain threshold.
The Government Accountability Office released a report in 2016 on their findings after a thorough investigation of the actual implications of this monitoring period. The report found that 98% of reinstated discharges were due to the failure to submit the requested documentation regarding earnings information. Therefore, effectively immediately, the Department of Education will instantiate two other new policies related to TPD:
- Indefinitely extending the halt on sending automatic requests for earnings information.
- Proposing "eliminating the monitoring period entirely,” in the upcoming negotiated rulemaking session in October of 2021.
Further Loan Forgiveness Measures Rolling Out in the United States
The Department of Education has also stated the “Biden-Harris Administration has now approved approximately $8.7 billion in student loan discharges for roughly 455,000 borrowers. In late March, the Department restored $1.3 billion in loan discharges for 41,000 borrowers who had seen their loans reinstated after not responding to requests for earnings information. Since March 2021, the Department has also approved more than $1.5 billion in discharges through the borrower defense to repayment process for nearly 92,000 borrowers whose institutions took advantage of them. In addition, the Department has extended the pause on student loan repayment, interest, and collections, to January 31, 2022, which helps 41 million borrowers save billions of dollars a month.” Some have called for less aggressive student-loan debt cancellation, where even President Biden himself is awaiting guidance from the Education Department and the U.S. Department of Justice as to his actual authority through executive action. However, on the other hand, we have outspoken proponents advocating for immediate cancellation, such as Sen. Majority Leader Chuck Schumer, D-N.Y. in stating, “You don’t need Congress... All you need is the flick of a pen.”
Schedule a Free Virtual Consultation With Social Security Disability attorneys in New York City
At O'Connor Law PLLC, we've helped countless individuals with disabilities obtain the SSDI benefits they need and deserve. Contact our SSDI attorneys in New York City today to schedule an initial consultation to discuss your SSDI claim with a member of our legal team for free and without obligation. Our lawyers serve clients in New York City and surrounding areas.