- Education Secretary Miguel Cardona canceled student debt for 41,000 disabled borrowers.
- It also removed the requirement to submit income documents for more than 230,000 borrowers.
- Experts said these changes should have happened years ago.
- See more stories on the Insider business page.
After canceling the student debt of about 72,000 defrauded borrowers two weeks ago, Education Secretary Miguel Cardona on Monday announced relief measures for borrowers with total and permanent disabilities.
Under the previous rule, established under President Barack Obama, anyone found to be permanently disabled by a physician, the Social Security Administration, or the Department of Veteran Affairs was eligible for federal student debt cancellation, along with the obligation to present documents for three years. monitoring period to verify that their income did not exceed the poverty line. Cardona waived the obligation to submit documents.
According to a press release, this will help over 230,000 borrowers. Of that total, 41,000, who had $ 1.3 billion in loans reinstated, will get their repayment – meaning there is no longer an obligation to repay them – and will be repaid on any payments made during the pandemic. The remaining 190,000 borrowers will not be invited to submit income documents.
“Borrowers with total and permanent disabilities should focus on their well-being, not putting their health on the line to submit income information during the COVID-19 emergency,” Cardona said in a statement. “Waiving these requirements will ensure that no borrower who is totally and permanently disabled is at risk of having to repay their loans simply because they could not submit paperwork.”
A 2016 Government Accountability Office report found that 98% of disability leave reinstated occurred because borrowers failed to submit required documents – not because their income was too high.
Eligible borrowers will begin to see their loans revert to release status in the coming weeks, the press release said, and the ministry plans to change the way it monitors the income of borrowers with total and permanent disabilities.
While this rule change may be good news for borrowers with disabilities who are struggling to repay their debt, experts say it isn’t doing enough to tackle the root of the problem.
In 2019, an NPR survey found that only 28% of eligible borrowers had the debt relief they were entitled to, and between March 2016 and September 2019, 75,000 of the 200,000 borrowers who entered the three-month follow-up period. years have failed their programs. and had their debt reinstated, all because they did not submit the documents.
As a result, a bipartisan group of lawmakers in 2019 urged the Trump administration to automatically pay off loans from borrowers with total and permanent disabilities, but that did not happen.
“Today’s announcement is not a cause for celebration but rather for outrage,” Persis Yu, director of the National Consumer Law Center Student Loan Assistance Project, said in a statement. “It is scandalous that the Ministry has canceled loan repayments for 41,000 borrowers with total and permanent disabilities due to paperwork issues during a pandemic.