Obama Gives Student Loan Relief To The Disabled

| by Robert Fowler
President Barack Obama President Barack Obama

The Obama administration has made it easier for hundreds of thousands of student loan borrowers to achieve debt forgiveness. The combined effort of the Department of Education and the Social Security Administration  will grant loan discharges to 387,000 permanently disabled Americans.

In 2012, the Obama administration enabled those with permanent disabilities to seek discharges on their student debts. According to Education Under Secretary Ted Mitchell, the majority of those eligible were either unaware or unable to take advantage of this new avenue out of debt, The Washington Post reports.

“Too many eligible borrowers were falling through the cracks, unaware they were eligible for relief,” Mitchell said in a statement.

The education under secretary added an example of one woman who was permanently disabled after her battle with breast cancer, left to struggle for seven years to receive a disability discharge, NBC News reports.

“Americans with disabilities have a right to student loan relief. And we need to make it easier, not harder, for them to receive the benefits they are due,” Mitchell concluded.

To identify who was qualified for debt relief, the DoED ran its own records on student debt with the records of Americans designated as “Medical Improvement Not Expected” by the SSA.

Through this process, the two agencies identified 387,000 who qualified loan discharges but had not taken advantage. Starting April 13 and continuing for 16 weeks, these borrowers will receive a letter that lays out how they can seek debt forgiveness.

The process will also be streamlined for them. Disabled borrowers generally must provide documentation that proves  they are disabled, while those who receive the letter will not have this requirement.

“In the past it’s been incredibly complicated to apply and that process has been getting better over time, but some people just assume that it’s not going to work,” Persis Yu of the National Consumer Law Center told MarketWatch.

Yu added that this new effort is still imperfect, noting that those who suffer psychological disabilities, such as Alzheimer’s, may be incapable of understanding the application.

Some of those with permanent disabilities may have their debts forgiven but may have to pay tax on the amount forgiven, which counts as taxable income in some instances.

Sources: MarketWatchNBC News, The Washington Post / Photo credit: Gage Skidmore/Flickr

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