The U.S. Department of Education announced on Thursday that federal student loan borrowers who have a total and permanent disability will receive automatic student loan discharge as a result of new regulations for total and permanent disability (TPD) discharge.
This forgiveness measure will impact more than 323,000 qualifying federal student loan borrowers, with relief totaling over $5.8 billion, and will make the discharge process more accessible to borrowers in the future.
New regulation makes it easier to get student loans discharged
The new regulation is part of an ongoing effort by the Biden administration to simplify the process of qualifying for TPD discharge, a federal law that discharges the federal student loan debt of borrowers with severe disabilities who can no longer work.
Before the new regulations, borrowers had to apply for relief and were subject to a three-year income-monitoring period after receiving their discharge — and if their income rose above a certain threshold, they would have their debt reinstated. This resulted in thousands of borrowers becoming disqualified due to documentation errors, not a lack of eligibility.
In early 2021, the department suspended income verification requirements as a form of coronavirus hardship relief. Now, TPD discharge will be automatically applied, and the department will permanently stop sending monitoring requests. In October, the department will work to eliminate the monitoring period entirely.
Qualifying borrowers will be automatically enrolled
Back in 2019, the Department of Education waived the application requirements for borrowers with disabilities though a match with the U.S. Department of Veterans Affairs (VA). However, this regulation was not widely available to the public, and as a result, only about half of eligible borrowers received relief.
Moving forward, borrowers who qualify as totally and permanently disabled will now be automatically identified through administrative data matching with the Social Security Administration (SSA). The first match is currently set to take place in September during the next SSA quarterly data match.
Borrowers impacted by the first match will be notified by the Department of Education in the following weeks and have the ability to opt out if they wish. It’s anticipated that all who qualify will have their loans discharged by the end of the year.