Feds Will Notify Disabled Borrowers Eligible For Student Loan Discharge

Under the law, borrowers who are permanently disabled are eligible to have their federal student loans discharged. While the government has taken steps in the past to make the process more streamlined for consumers, the Department of Education will now proactively seek out eligible borrowers. 

The Department of Education announced Wednesday that it will work to identify eligible borrowers and guide them through the steps to discharge their loans.

A Total and Permanent Disability (TPD) loan discharge, created under the Higher Education Act, allows for loan forgiveness for borrowers who are totally and permanently disabled.

“By proactively identifying and engaging borrowers who may be eligible for TPD loan discharge, the Department is fulfilling its commitment to ensure that borrowers who are totally and permanently disabled have the information needed to take full advantage of the debt relief to which they are entitled,” the Dept. said in a statement.

In order to identify eligible borrowers, the Dept. will work with the Social Security Administration to pinpoint those receiving disability payments and who have the specific designation of “Medical Improvement Not Expected.”

According to the Dept. of Education, a first review of matches — completed in Dec. 2015 and March 2016 — found 387,000 borrowers that matched the criteria, accounting for $7.7 billion in federal student loans.

Of those borrowers, 179,000 of those people were currently in default. The Dept. has worked to forgive about 100,000 of those consumers, removing their risk of losing federal tax refunds or having their Social Security benefits offset.

Beginning on April 18, borrowers who were positively identified in the match will receive a customized letter explaining that they are eligible for loan forgiveness and the steps needed to receive a discharge.

Unlike other borrowers who seek TPD loan discharges on their own, those identified through the data match will not be required to submit documentation of their eligibility. Instead, they are eligible for a streamlined process by which they simply sign and return the completed application.

Initial notification letters will be sent over a 16-week period and will be followed up with a second letter that will be sent 120 days after the initial letter if a signed application is not received, the Dept. says.

by Ashlee Kieler via Consumerist