skynesher / Getty Images
The US Department of Education announced Thursday that 323,000 borrowers had wiped out their student loan debt. This new ordinance removes approximately $ 5.8 billion in debt from borrowers who have complete and permanent disability.
See: Do you have student loans? It is possible that they will be forgiven
Do you think: Is college really worth it? A look into the grim reality for student loan borrowers
The TPD relief program relieves borrowers of student loan debt who are unable to maintain employment due to a physical or mental impairment, Forbes reported. However, borrowers with disabilities must file a formal application for debt relief, which can be challenging for those with serious health problems and some may not even realize they are eligible.
The Department of Education has long been criticized for not automatically granting TPD layoffs to disabled student loan borrowers who receive disability benefits through Social Security. Forbes added that Social Security had previously identified hundreds of thousands of disabled student loan borrowers who would qualify for TPD layoffs.
“Today’s move removes a major barrier that has prevented far too many borrowers with disabilities from receiving the full and permanent disability discharge to which they are legally entitled,” United States Secretary of Education Miguel Cardona said Thursday.
This new regulation enables the ministry to provide automatic TPD layoffs to borrowers identified through administrative reconciliation. The application barrier was removed in 2019 for student loan borrowers who are eligible for a TPD discharge by cross-checking data with the US Veterans Affairs Department.
See: Students Can Save $ 11,451 While Studying Living At Home – But At What Price?
Find: The Most Unusual Scholarships And Education Grants You Can Use To Pay For School
Borrowers who receive a TPD discharge through the SSA match or doctor’s certification process are also subject to three-year income monitoring, the Department of Education said. Borrowers can lose their TPD relief if their income is above a certain threshold or if they fail to comply with a request for income information.
The story goes on
The Ministry of Education announced that this change will take effect with the next quarterly reconciliation between the Ministry and the SSA in September. All discharges are federal income tax exempt, but there may be some state income tax consequences. Borrowers also have the option to opt out if they so choose.
More from GOBankingRates
Take our survey: Do you actually spend paying the tax credit on your child?
5 Things Most Americans Don’t Know About Social Security
This is how much you have to earn to be “rich” in any state
5 cities around the world are experiencing a boom in the housing market
This article originally appeared on GOBankingRates.com: Department of Education Announces Cancellation of Student Loan Debt for More than 320,000 Borrowers