Education Department eliminates $5.8 billion in student loan debt for some disabled borrowers

By CNN Newsource

August 19, 2021 6:30 PM

Published August 19, 2021 7:20 PM

By Paul LeBlanc, CNN

The US Education Department announced Thursday it will cancel $5.8 billion in outstanding student loans for borrowers who are unable to work because of permanent disabilities.

More than 320,000 “total and permanent disability” borrowers will benefit from the move, the agency said in a press release, and hurdles for relief will become automatic for those who qualify moving forward.

“Today’s action removes a major barrier that prevented far too many borrowers with disabilities from receiving the total and permanent disability discharges they are entitled to under the law,” Education Secretary Miguel Cardona said in a statement.

The statement continued: “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.”

The announcement brings a considerable overhaul to a student loan program that had long been maligned for its complex rules, including the need for borrowers to submit proof of their disability and face a three-year-long monitoring period of their income.

The Education Department said Thursday that qualifying borrowers will be identified automatically through a Social Security Administration data match and that the agency will pursue permanently eliminating the monitoring period — which the Biden administration waived this spring — in October.

House Education and Labor Committee chairman Rep. Bobby Scott, a Democrat, celebrated the announcement in a statement Thursday. “In just eight months, the Biden Administration has delivered student loan relief for hundreds of thousands of eligible borrowers and restored Education Department’s focus on serving the best interests of students, families, and our economy, ” he said.

“I look forward to working with the Administration to continue supporting students and making higher education accessible and affordable for all Americans,” Scott added.

Since taking office, President Joe Biden has faced pressure from Democrats for broad debt forgiveness, including calls to cancel $50,000 in student debt per borrower. Biden has resisted the pressure so far but has said he would support a move by Congress to cancel $10,000 per borrower.

Earlier this month, the Biden administration extended the pandemic-related suspension on federal student loan payments one last time until January 31.

Biden has also directed Cardona to write a memo on the president’s legal authorities to cancel debt. An executive action that broadly forgives federal student loans would be unprecedented, but a memo from lawyers at Harvard’s Legal Services Center and its Project on Predatory Student Lending says the Department of Education has the power to do so.

CNN’s Katie Lobosco contributed to this report.

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