News: Letter to ED and SSA

National coalition of student loan ombudspersons urge automatic discharge for totally, permanently disabled civilian borrowers

March 3, 2020 
*Updated 8:40 a.m. to include ED's statement to NPR in response to coalition's letter 

Student loan ombudspersons from 7 states and Washington, D.C. call on U.S. Department of Education to grant the same automatic relief to totally and permanently disabled civilian borrowers as it is granting to veterans. 

Olympia, WA—On behalf of a national coalition of student loan ombudspersons, Washington’s student loan advocate sent a letter today to the U.S. Department of Education (ED) and Social Security Administration (SSA). The coalition calls on ED to automatically grant relief to borrowers who are totally and permanently disabled—including civilians.

In a statement to NPR, Education Department Press Secretary Angela Morabito suggested the department is open to change:

"The Department's current implementing regulations require it to receive an application before completing a civilian [total and permanent disability] discharge, but we are interested in providing automatic discharge to these borrowers and believe the FUTURE Act makes this a possibility — but will require the department to undergo negotiated rulemaking."

Totally and permanently disabled is a term that applies to cases where the person may never find gainful employment.

There’s already a law that gives ED the authority to discharge these loans. And it’s not new—it’s been around for over 50 years: Title IV of the Higher Education Act of 1965 includes the Total and Permanent Disability Loan Discharge Program. 

“Borrowers who are totally and permanently disabled went to school to improve their lives—but now, they’re in extreme circumstances where they can’t get the financial benefits of their degrees,” points out Washington’s student loan advocate, Stephanie Sampedro. “ED should give them relief—not create more barriers to overcome.”

ED already knows which borrowers qualify for relief under the Total and Permanent Disability Loan Discharge Program.

The coalition is asking ED to automatically discharge these loans because ED has already identified approximately 570,000 civilian student loan borrowers who qualify for this relief. ED identified them using information the federal government already has from SSA. ED has even sent letters to all these borrowers.

ED makes eligible borrowers go through an onerous application process. More than half—over 353,000—of these civilian borrowers haven’t received the relief they qualify for.

“ED has the authority and resources to grant this much needed relief,” says Sampedro. “And these borrowers, who receive modest benefits from SSA, struggle to repay their student debt.”

The consequences for these borrowers—less than 1 percent of all student loan borrowers in the U.S.—can be dire.

Borrowers who qualify for the Total and Permanent Disability Loan Discharge Program are more likely to be in or near poverty. Because they can’t work, they’re not financially benefitting from their degree. When they can’t make their student loan payments, ED garnishes their disability benefits. And when their benefits are garnished, they’re forced to make choices between vital basics like housing, groceries, transportation, and medical expenses.

ED has already agreed to automatically discharge student loans for one group of totally and permanently disabled borrowers: veterans.

In August 2019, the White House sent a presidential memorandum directing ED to develop a process for automatically granting this relief to veterans. The memorandum said ED’s application process was “overly complicated and difficult and prevented too many of our veterans from receiving the relief for which they are eligible.”

Now, student loan ombudspersons are calling on ED to do the same for civilian borrowers.

Background

State student loan ombudspersons

In recent years, states have begun taking action to protect their student loan borrowers. Some states have created student loan ombudspersons, with varying scopes of responsibility and authority. Generally, these state officials address the problems of student loan borrowers and discuss solutions. They also have a role in educating consumers. The ombudspersons provide educational materials and outreach to ensure that future college students are wise consumers of education loans, which make postsecondary education possible for many students.

Washington State’s student loan advocate

In Washington State, the Office of the Student Loan Advocate is housed in the Washington Student Achievement Council. Student loan borrowers in Washington State can visit the Student Complaint Portal to submit a request for information or help.

Washington Student Achievement Council