Obama will forgive the student loan debt of people who are permanently disabled

The Obama administration is planning on forgiving over $7.7 billion in federal student loans held by nearly 400,000 permanently disabled Americans. The move stems from President Obama‘s Student Aid Bill of Rights which provides students with more rights and protections.

According to the Washington Post, the administration is allowing those who are permanently disabled to use their Social Security designation to apply for the discharge, but very few took advantage of the opportunity. Now,the Department of Education is taking it upon itself to identify those with student debt and guide them through the steps to discharge their loans.

“Too many eligible borrowers were falling through the cracks, unaware they were eligible for relief,” said Education Under Secretary Ted Mitchell in a statement. “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.”

The Department of Education is working with the Social Security Administration to identify borrowers who are receiving disability payments and those who have the specific designation of “Medical Improvement Not Expected,” indicating they are eligible. Together, the agencies found 387,000 matches in its first review. Of those, 179,000 are currently in default, putting them at risk of losing their tax refunds and having their Social Security benefits stripped away.

“The creation of the matching program is a great first step, but the administration needs to go further to ensure that no borrower who has a right to student loan relief has their benefits taken,” said Persis Yu, the National Consumer Law Center’s student loan borrower assistance project director. “Borrowers receiving SSDI need these payments to survive.”

From the Washington Post:

Starting next week, borrowers identified in the match will receive a letter from the government explaining the steps needed to receive a discharge. They will not be required to submit documentation of their eligibility, unlike disabled borrowers who apply for the discharge on their own. Notification letters will be sent over a 16-week period, and followed up with a second letter after 120 days.

Featured image: Barack Obama (Flickr)

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