Biden To Automatically Cancel $5.8 Billion In Student Loans For Disabled Borrowers

Biden administration grants automatic student loan forgiveness to permanently disabled borrowers

The Biden administration moved Thursday to grant 323,000 people who are severely disabled automatic federal student loan forgiveness to the tune of $5.8 billion, setting the stage for reforms to a process that is widely criticized as cumbersome and onerous.

“The Department of Education is evolving practices to make sure that we’re keeping the borrowers first and that we’re providing relief without having them jump through hoops,” Education Secretary Miguel Cardona said on a call with reporters Thursday. “I’ve heard from borrowers over the last six months that the processes are too difficult so we’re simplifying it.”

Advocates have long argued that the Department of Education has the ability and the authority to automatically grant TPD Discharges to disabled student loan borrowers who are receiving disability benefits through Social Security (provided that they have a disability review period of at least five to seven years). The Social Security Administration had previously identified hundreds of thousands of disabled student loan borrowers who would qualify for TPD discharges, and the agency has shared that information with the Department of Education, but the Department had not acted.

On Thursday, that finally changed, and the Department of Education will move forward in automatically discharging approximately $5.8 billion in federal student loans for disabled borrowers identified by the Social Security Administration as eligible. Secretary of Education Miguel Cardona characterized the action as “in alignment with our strategies from day one to put our borrowers at the center of the conversation… Today’s action removes a major barrier that prevented far too many borrowers with disabilities from receiving the total and permanent disability discharges they are entitled to under the law,” he said.

If student loan forgiveness is enacted, it will most likely be only for these federal loans, said Pentis.

“The majority of proposals that are being discussed in Washington D.C., mostly by the left side of the aisle specifically cater to government-owned student debt — so that is federal student loans. If you have a private loan you are unlikely to benefit from any sort of mass forgiveness proposal.

“Progressive Democrats have been pushing for this [loan forgiveness] idea, but they’ve yet to gain enough bipartisan support, both from more moderate members of their party, as well as Republicans, to get something like student loan forgiveness done.

“If you are a federal student loan borrower, it’s not the best idea to pin your hopes on forgiveness coming down the pike any time soon,” Pentis said.

Sen. Rob Portman (R-Ohio) said this month that he is in favor of discharging outstanding student loans of more than 517,000 Americans with a total and permanent disability (TPD) and had signed a letter about this to Secretary of Education Miguel Cardona.

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