In the last weeks, the federal government began to send out notices to 387,000 individuals, including people approved for Social Security disability benefits, who are facing burdensome student loan debt while also experiencing severe, permanent disabilities. The notices provide a streamlined process to those disabled persons to have their student loans discharged.
The U.S. Department of Education announced in April 2016 that it was enacting a new process to proactively identify and assist individuals with disabilities who have outstanding federal student loans and may be eligible for Total and Permanent Disability (TPD) loan discharge. This effort was part of President Obama’s Student Aid Bill of Rights. Not all Social Security disability recipients are eligible for the discharge. Student loan forgiveness is allowed only to borrowers found to be disabled by the Social Security Administration who also have the SSA designation “Medical Improvement Not Expected.”
Many student loan borrowers who became totally and permanently disabled are not aware that they are eligible for this relief. The new process is an attempt to correct this problem by notifying borrowers, including permanently unemployable Veterans and SSA recipients with permanent disabilities, of their eligibility and walking them through the process of discharging their loans.
To locate the eligible borrowers, the U.S. Department of Education completed a data match with the help of SSA to identify federal student loan borrowers who receive Social Security disability payments and whose medical condition is not expected to improve. In April 2016, these borrowers began to receive customized letters explaining their eligibility for loan forgiveness and a streamlined process for receiving a loan discharge. This process allows them to bypass the typical documentation to prove their eligibility since their disability status with Social Security has already been verified. Individuals only need sign and return their application, and the loan is discharged.