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The Government Hasn’t Acted on Student Loan Forgiveness

Two disabled students reading a book.Over half a million student loan borrowers may be entitled to have their student debt cancelled under federal law, but the U.S. Department of Education has not acted.

The National Student Legal Defense Network (NSLDN) obtained data through a Freedom of Information Act request indicating that the Department has identified more than 517,000 borrowers who are eligible to have over $8 billion in student loans cancelled under the Total and Permanent Disability (TPD) dischargeprogram. The TPD Discharge program allows student loan borrowers who are unable to maintain substantial, gainful employment due to a physical or psychological medical impairment to get their federal student loans completely forgiven.

To obtain student loan forgiveness under the TPD Discharge program, however, disabled student loan borrowers must submit a formal application. The application process can be challenging, particularly for borrowers who suffer from severe physical or psychological impairments that interfere with their ability to handle routine tasks.

The Department of Education has authority to automatically grant a TPD Discharge to disabled student loan borrowers who are receiving Social Security Disability benefits, if they have a disability review period of at least five to seven years. The Social Security Administration has identified hundreds of thousands of disabled student loan borrowers who would qualify for relief under the program, and the agency has shared that information with the Department of Education. But the Department has not acted. Many borrowers may not even realize that they qualify.

“The Department has made the TPD discharge process needlessly cumbersome for borrowers with disabilities,” said Alex Elson, NSLDN Vice President. “They know who these borrowers are, they know they are entitled to relief, and there is simply no good reason why they cannot provide it now.”

In April, student loan borrower advocacy organizations submitted a formal rulemaking petition to the Department of Education to pressure the Department to streamline the TPD discharge program. The organizations included a letter urging the Department to act.

“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 letter from student, consumer, and disability rights advocates read.

The Biden administration has taken some steps to address the troubled TPD discharge program. Earlier this year, the administration announced that it was loosening bureaucratic requirements for the TPD discharge program by temporarily waiving post-discharge monitoring periods during the COVID-19 pandemic. And last month, the Department of Education announced the beginning of a lengthy negotiated rulemaking process to review and potentially overhaul major federal student loan programs, including the TPD discharge program, as well as other programs such as income-based repayment and Public Service Loan Forgiveness.

Meanwhile, the administration is conducting a legal review to determine whether Biden has authority to go further and cancel student loan debt on a broad scale using executive action. The results of that review could be released in the coming months.


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