US to eliminate student debt for borrowers with permanent disabilities
The Biden administration is wiping out more than $ 5.8 billion in student loans for more than 323,000 permanently disabled borrowers, the latest step in the government’s piecemeal efforts to ease the burden on millions of adults struggling for pay off their debts.
The Education Department said Thursday it would automatically pay off loans for borrowers with total and permanent disabilities by matching borrower files with Social Security Administration records. A similar policy has been in place since 2019 for people found to be disabled via the Ministry of Veterans Affairs. Borrowers with total and permanent disability are generally limited in their ability to work and repay loans.
The government will also stop requiring these borrowers to provide income statements in the future; currently, failure to respond may result in loan reinstatement. A 2016 Government Accountability Office report found that 98% of discharges reinstated were due to borrowers failing to submit documents, and not because borrowers’ income was too high.
“We are working to improve targeted loan relief and help our borrowers,” Education Secretary Miguel Cardona said, adding that one of the department’s goals is to simplify the process for borrowers seeking loan relief. their debt.
President Biden has resisted calls from fellow Democrats and activists to write off most of the estimated US $ 1.6 trillion in federal student loan debt through executive action. Republicans in Congress would likely block efforts to pass similar measures. They said that many borrowers can afford to repay their loans, and that there are already more targeted relief efforts for those in financial difficulty, such as income-based repayment programs and forbearance.
Mr Cardona said discussions about a wider forgiveness of student loans were underway with the White House and the Justice Department.
Including those affected by Thursday’s announcement, the Biden administration laid out plans to pay off $ 8.7 billion in loans for about 455,000 borrowers. Those who have benefited from debt relief also include borrowers who have said they have been deceived by the schools’ marketing arguments. The government also suspended collection of delinquent federal loans held by private lenders and, earlier this month, extended until January a forbearance period for federal loans that was scheduled to expire in late September.
Mr Cardona said on Thursday the administration was also working to improve a loan cancellation program that wipes out loans from borrowers who have held public service jobs for a decade, and to streamline a cancellation program that wipes out loans for borrowers whose schools have used deceptive recruiting tactics. .
Write to Melissa Korn at [email protected]
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Appeared in the August 20, 2021 print edition under the title “Billions More in Student Debt Cleared”.