How to Get Student Loan Forgiveness for a Disability

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People with severe disabilities have been able to get their student loans forgiven since 1965. But it’s a daunting process that often fails those who need debt relief the most.

For example, a white paper produced by disability rights advocates tells the story of a woman who lost both her legs and was unable to work. She applied for Social Security disability benefits and discharge of her remaining student loan debt.

The benefits have manifested. But the student loan paperwork bounced back – because her doctor forgot to certify the ostensibly obvious fact that having two legs below her knees counts as the “very severe” type of impairment needed for the debt to be discharged.

Bureaucratic hurdles like this have cost people with disabilities billions of dollars — a disproportionate number of them over the age of 50 — preventing them from earning enough money to continue paying off their student loans.

Now the federal government is trying to fix the process. But while critics say the improvements are substantial, there are still important caveats, especially for people over 62.

“The problem we’ve been trying to solve is a problem that many government programs face, which is just bureaucracy and messy paperwork,” said Bethany Lilly, senior director of revenue policy at The Arc. , which advocates for people with intellectual and developmental disabilities. disabilities.

Reforms have been slow

You can have your student loans canceled if you are totally and permanently disabled, that is, unable to earn an income due to a medical or mental impairment that has lasted at least five years or is expected to result in death. Veterans with service-related disabilities may also have their student loans forgiven.

In practice, this has proven to be “illusory protection”, found the Center for the Protection of Student Borrowers. Many eligible borrowers either didn’t know they were or got lost in “unnecessary bureaucratic hurdles” while trying to juggle student loan repayments and long-term medical bills on fixed incomes.

Among the biggest of those hurdles: a requirement that candidates check their income annually to make sure they weren’t being paid. If they didn’t confirm their income or repay their loans, the government could take what they still owed from their Social Security checks.

“It was terrible. It was absolutely terrible,” said John Whitelaw, advocacy director for the Community Legal Aid Society. “The Department of Education had really too narrow rules about who could qualify.”

According to a survey conducted by the US Government Accountability Office. GAO found that a large number of borrowers with disabilities started but never completed the process of requesting loan forgiveness, even though they were likely eligible for loan forgiveness; 90% of people aged 50 and over whose benefits were withheld because they failed to repay their loans were later found to be eligible for cancellation of those loans.

The income verification requirement has proven culprit in many of these cases. About 20% of borrowers 50 and older who had successfully had their loan forgiven had their debt abruptly reinstated — almost all because they hadn’t submitted the form, the GAO reported.

“All of these people failed not because they earned too much but because they couldn’t do the paperwork,” Whitelaw said. It’s especially common, he said, for people with disabilities to be stymied by bureaucratic challenges like that.

Even when the Department of Education tried to make it easier for them, many people still did not complete the loan cancellation application. In 2016, the department wrote to 234,000 borrowers of all ages whose Social Security records indicated they were eligible to have their loans canceled because they were disabled, and who would likely be approved if they applied. . Of these, less than 1 in 10 responded.

Under pressure from Congress and state attorneys general, the Department of Education agreed in 2019 to forego red tape and automatically discharge the remaining student loan debt of approximately 20,000 totally and permanently disabled veterans. But the same accommodation was only originally provided for non-veterans last year.

That’s when the department extended the automatic pardon to non-veterans who, according to the Social Security database, met the definition of being totally and permanently disabled. He also temporarily dropped the requirement for annual income verification, a change he proposed to make permanent. The new rules are expected to be finalized by November, a department spokesperson said.

“They had all this data, and you would have thought they could have come in and gone through it,” Lilly said, but it took until now to do that.

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