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Dec 11, 2021

Federal Student Loan Discharge Changes Coming

      From Forbes:

The Biden administration took a big step this week towards making significant changes to a key federal student loan forgiveness program that provides relief for disabled student loan borrowers.

The Total and Permanent Disability (TPD) discharge program provides student loan forgiveness to federal loan borrowers who are unable to maintain substantial, gainful employment due to a physical or psychological medical impairment. …

The Education Department is moving forward to implement significant changes to the TPD Discharge program through a process called negotiated rulemaking — a lengthy, formalized procedure where a committee of key stakeholders must hold public meetings and reach consensus to overhaul the rules that govern federal student loan programs.

Yesterday, the negotiated rulemaking committee reached an agreement on implementing several big changes to the TPD discharge program:  …

  • Expand Eligibility For Recipients of Social Security. For borrowers receiving Social Security disability benefits, the new rules would eliminate the requirement that a borrower’s disability review period be at least five to seven years. Instead, borrowers who have been receiving Social Security disability benefits for at least five years prior to applying for TPD relief, or have a disability onset date at least five years before applying, would be eligible. This would effectively expand the pool of eligibility for disabled borrowers and make it easier for borrowers to show that they qualify for relief.

     Far more disabled people have federal student loans outstanding than you might imagine. This is a big deal for them. 

7 comments:

  1. TPD should be found upon being granted SSD or SSI, not five years later.

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  2. Who is paying for this?

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  3. @8:12

    Nobody, because the waiver of debt owed to the government is not an equivalent expense to the waived debt. To the extent it terminates early an expected stream of future revenue (an insanely minor one), this is not a new system and adjustment of the budget is accounted for by Congress in the normal budgeting process.

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  4. Soooooooooooooooooo, as one of the negotiators on the recent rulemaking:
    I wish that TPD could be granted to all disabled SSI/Soc Sec recipients. It can't.
    WHY NOT, waaaaaaaaa.
    The loan discharge statute has a 60 month disability requirement rather than 12.
    Here is a link to a paper that I co-authored on this subject and which formed the basis for the new rules. We did not get everything we originally wanted, but we are very pleased with the result.
    https://protectborrowers.org/wp-content/uploads/2021/02/Delivering-on-Debt-Relief-Final.pdf#page=94

    John S. Whitelaw, Advocacy Director, CLASI (Delaware)


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  5. Only Federal, the private student loans are still in place?

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  6. @2:04pm It seems odd that all the conversations about loan forgiveness does not discuss forgiveness of educational loans from private banking institutions since they can have the same devastating effects on folks as loans from federal programs.

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  7. I sure hope this takes into factor if the Loan was taken AFTER they are on disability. I see this all the time. These should not be forgiven!

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