Biden Admin to Eliminate $5.8 Billion in Federal Student Debt for Borrowers With Disabilities

By GQ Pan
GQ Pan
GQ Pan
Reporter
August 19, 2021 Updated: August 19, 2021

The Biden administration on Thursday said it will discharge more than $5.8 billion in student loans, a move that aims to help ease the financial burden on hundreds of thousands of borrowers who have permanent disabilities.

According to the announcement by the Department of Education, those classified as totally and permanently disabled (TPD) by the Social Security Administration (SSA) will no longer have to file an application for student loan debt relief. Instead, the department will automatically erase loans for borrowers with TPDs by matching their records with the SSA database every quarter, starting from September.

Established in 1965, the federal TPD Discharge program is designed to relieve Americans who are no longer able to work because of severe disabilities from repaying their federal student loans. Until now, borrowers eligible under the program had to apply for a TPD discharge.

“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,” said Education Secretary Miguel Cardona, noting that more than 323,000 eligible borrowers are expected to receive relief amounting to $5.8 billion.

In a similar move, the Trump administration in 2019 automatically canceled federal student loan debts for veterans who qualified for a TPD discharge through a data match with the Department of Veteran Affairs. Former Education Secretary Betsy DeVos said at that time that her department eliminated an average of $30,000 for each of the more than 25,000 qualified veterans.

Cardona said his predecessor cleared the application barrier only for veterans, but the new rule will allow non-veterans with TPDs to avoid the paperwork.

“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,” he said. “This change reduces red tape with the aim of making processes as simple as possible for borrowers who need support.”

Cardona also announced a change to the rule regarding a three-year income monitoring period, during which borrowers who have been granted TPD discharges may lose their discharges if their earnings are above a certain threshold, or they do not respond to a request for earnings information. He said the department will indefinitely stop sending those requests, and promised to eventually remove the monitoring period as a whole.

The announcement comes as President Joe Biden continues to face pressure from a group of Democrats led by Senate Majority Leader Chuck Schumer (D-N.Y.) and Sen. Elizabeth Warren (D-Mass.), urging him to wipe out up to $50,000 in federal student loans per borrower via executive actions. Biden said earlier this year that he has tasked Cardona to study whether the president has the authority to do so.

GQ Pan
GQ Pan
Reporter