- Education Secretary Miguel Cardona canceled student debt for 41,000 disabled borrowers.
- It also removed the requirement to submit income documents for more than 230,000 borrowers.
- Experts said these changes should have happened years ago.
After forgetting his student loan debt for about 72,000 defrauded borrowers Two weeks ago, Education Secretary Miguel Cardona on Monday announced relief measures for borrowers with total and permanent disabilities.
According to the previous rule, established under President Barack Obama, anyone identified as permanently disabled by a physician, the Social Security Administration, or the Department of Veteran Affairs was eligible for federal student debt cancellation, with the requirement to submit documents for a period of three-year monitoring to verify that their income did not exceed the poverty line. Cardona waived the obligation to submit documents.
According to a Press release, this will help over 230,000 borrowers. Of that total, 41,000 who reinstated $ 1.3 billion in loans will have their loans canceled – meaning there is no longer an obligation to repay them – and will be reimbursed for any payments made during the pandemic. . The remaining 190,000 borrowers will not be asked to submit income documents.
“Borrowers with total and permanent disabilities should focus on their well-being, not putting their health on the line to submit income information during the COVID-19 emergency,” Cardona said in a statement. “Waiving these requirements will ensure that no borrower who is totally and permanently disabled is at risk of having to repay their loans simply because they could not submit documents.”
A 2016 report from the Government Accountability Office found that 98% of reinstated disability releases occurred because borrowers failed to submit required documents – not because their income was too high.
Eligible borrowers will begin to see their loans revert to release status in the coming weeks, according to the press release, and the ministry is considering further changes in the way it monitors the income of fully incapacitated borrowers and permed.
While this rule change may be good news for borrowers with disabilities who are struggling to repay their debt, experts say it isn’t doing enough to tackle the root of the problem.
In 2019, a NPR survey found that only 28% of eligible borrowers were getting the debt relief they were entitled to, and between March 2016 and September 2019, 75,000 of the 200,000 borrowers who entered the three-year follow-up period dropped out of their programs and saw their debt restored, all because they did not submit the documents.
As a result, a bipartisan group of lawmakers in 2019 urged the Trump administration to automatically offload loans from totally and permanently disabled borrowers, but that did not happen.
“Today’s announcement is not a cause for celebration but rather for outrage,” said Persis Yu, director of the student loan aid project at the National Consumer Law Center, in a statement. “It is outrageous that the ministry has revoked loan waivers for 41,000 totally and permanently disabled borrowers due to paperwork issues during a pandemic.”