Obama Administration to Clear Student Loans for People With Permanent Disabilities

By Denisse Moreno
Denisse Moreno
Denisse Moreno
April 13, 2016 Updated: April 13, 2016

Hundreds of thousands of permanently disabled people are eligible for a student loan pardon through the Obama administration. 

The new process will help federal student loan borrowers with disabilities who may be eligible for a Total and Permanent Disability (TPD) loan discharge, said the Department of Education on April 12.

President Obama called for the effort in his 2015 Student Aid Bill of Rights, which tries to help people paying for college an easier and fairer experience.

The Obama administration said many eligible borrowers did not know about relief resources.

“In 2012, the Administration took steps to streamline the process to allow for Americans who are totally and permanently disabled to use their Social Security designation to apply to have their loans discharged. But too many eligible borrowers were falling through the cracks, unaware they were eligible for relief,” said U.S. Education Under Secretary Ted Mitchell in a statement.

He also used a case as an example, in which a woman whose side effects from treatments for breast cancer left her permanently disabled. She repeatedly tried to get her loan cleared and was finally pardoned after a 7-year process.

“Americans with disabilities have a right to student loan relief. And we need to make it easier, not harder, for them to receive the benefits they are due,” said Mitchell.

“Under the new process, we will notify potentially eligible borrowers about the benefit and guide them through steps needed to discharge their loans, helping thousands of borrowers,” said Mitchell.

The Department of Education will begin send out letters on April 18 to approximately 387,000 eligible people for loan forgiveness. The total worth of the loans is $7.8 billion. Out of those people, about 179,000 have student loans that are in default.

The letters will include an application to fill out and mail back. The Department of Education says that unlike other borrowers, the people who have been identified through the data match will not be required to submit documentation of their eligibility. The move will not impact a person’s Social Security or disability payments.  

Once approved for a loan pardon, successful applicants enter a 3-year post-discharge monitoring period. If applicants fail to meet the requirements, their obligation to repay their discharged loans will be reinstated. 

The agency said that more information is available at: disabilitydischarge.com