US Education Department Provides Relief for Student Loaners With Disabilities

United States (US)

The US Department of Education (Department) has announced debt relief for student loaners who received discharges due to total and permanent disability. This action aims to ensure borrowers that they don’t need to have their debt reinstated just because they failed to provide earnings information during the COVID-19 emergency.

More than 230,000 borrowers will benefit from this action, with over 41,000 borrowers accounting for $1.3 billion in loans that were reinstated but will now get their discharges back, reports.

According to a press release of the Department, the other 190,000 borrowers who remain in their monitoring period will not be asked to submit earnings documentation. These income monitoring requirements will be waived for the duration of the COVID-19 emergency.

“Borrowers with total and permanent disabilities should focus on their well-being, not put their health on the line to submit earnings information during the COVID-19 emergency,” said Education Secretary Miguel Cardona.

The Education Department provides this relief for debtors who received a federal loan discharged because of total and permanent disability during the COVID-19 lockdown.

Borrowers receiving this relief will be monitored for three years, excluding the Department of Veterans Affairs cases. During the three years, the Department requires information about employment earnings from the beneficiaries.

According to the latter regulation, borrowers whose earnings are lower than the criteria required will have their loans put back. Regardless, according to a Government Accountability Office report, 98 percent of reinstated disability discharges happened not because earnings were too high but because borrowers failed to submit the requested documentation.

The Department will not ask borrowers with a total or permanent disability discharge to provide earnings documentation during the COVID-19 emergency. This change will be effective for an extended period of time, from March 13, 2020, with the COVID-19 outbreak announced as a national emergency.

The Department will also revoke loan reinstatement repayment during the emergency and won’t require earnings documentation to be provided. Borrowers will see their loans return to a discharge status in the coming weeks, following up with their servicer’s communication.

This action is part of the Biden-Harris administration’s continued efforts to offer support and protection for students during the COVID-19 emergency. The plan includes a temporary halt on interest, payments, and collection activity on most student loans through at least September 30, 2021.

The Department also requested a renunciation from the Small Business Administration to urgently help 30,000 small business owners in the Paycheck Protection Program who struggled because they were overdue or in default on a federal student loan.

Previously, Congress passed the relief bill to revoke student loan payments and remove interest, extending the deadline for application until January 31 under Trump’s administration. During his campaign, President Biden encouraged a $10,000 reduction for borrower students.

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