The U.S. Department of Education is canceling student debt for more than 40,000 Americans who were previously loaned due to disabilities but whose debts were later resumed after failing to submit certain documents, the agency said Monday.
The action is aimed at a credit program designed to help people with disabilities, but which critics consider to be unduly burdensome. After the loan is granted, borrowers are required to provide records of their earnings for three years. If their earnings exceed certain thresholds or if they fail to submit documents, they are back on the hook for their loans.
The education department recognized the challenges of the program and said it would relax the rules during the coronavirus pandemic and consider further changes to reporting requirements in the future.
Until the federal government declares the end of the pandemic, more than 190,000 borrowers now in the three-year monitoring period will not have to provide evidence of their earnings, the agency said. Another 41,000 whose debt has been resumed due to paperwork will be re-loaned for a total of $ 1.3 billion.
Education Minister Miguel Cardona said borrowers with disabilities should not “put their health at risk” to submit income information.
The move was a disappointment for proponents who have called for a complete overhaul of the program. Student Defense, a legal group in Washington, said the move will help a small fraction of the borrowers who are eligible for the program. The group has asked Biden to automatically grant loans to all eligible borrowers and permanently remove the monitoring period.
Alex Elson, the group’s senior counsel, said the new measure was “not a victory for students”.
“There are around 400,000 disability borrowers that the Social Security Agency has already determined to be legally owed,” he said. “The Ministry of Education knows exactly who they are, but decides not to do anything for them.”
A senior rapporteur for the department said the agency was considering permanent changes to the program but had to go through a federal regulatory process that would require months of negotiations.
The program was created to help people who are “completely and permanently disabled” and unable to earn significant income.
Borrowers are eligible if they can provide evidence of a mental or physical disability that will last or is likely to last for at least five years. During the monitoring period, their incomes must not exceed the poverty line of a family of two in their state.
The program came under scrutiny in 2016 after a federal guard found that income reporting rules were a major hurdle for borrowers. The US Government Accountability Office found that 98% of the times that credit recovered were due to borrowers failing to provide proper documentation and not making too much.
In 2019, the Trump administration relocated to provide automatic credit relief to military veterans eligible for the program. However, those who have not served in the military must apply for relief. Proponents estimate that nearly 70% of eligible borrowers have failed to get loans and have an estimated $ 14 billion in student debt.
Copyright © 2021. All rights reserved. This website is not aimed at users in the European Economic Area.
Comments are closed.