Many Student Loan Borrowers with Disabilities Get a Reprieve, But Advocates Push for More

The Biden administration has announced relief for hundreds of thousands of people with disabilities who had their federal student loan debt reinstated because they failed to submit the proper paperwork during the COVID-19 pandemic. However, advocates are urging the administration make another change that would quickly cancel the student loan debt of all people with qualifying disabilities.

It is notoriously hard for borrowers who become totally and permanently disabled to discharge their federal student loan debt. To qualify for a disability discharge, a borrower must show that she has a physical or mental impairment that will either result in death or has lasted or will be expected to last more than 60 months. a far higher standard than that for qualifying for Social Security Disability Insurance or Supplemental Security Income benefits. (Different, less stringent rules apply to veterans with disabilities.)

Moreover, the government subjects these borrowers to a three-year monitoring period, where they must submit annual documentation showing that their income falls below the allowable threshold. Failure to provide this documentation results in the debt being reinstated. A 2016 Government Accountability Office report found that for 98 percent of borrowers whose debt was reinstated under this program, the reason was their failure to submit the proper documentation, not that their income had, in fact, exceeded the threshold. 

With the administration’s announcement, more than 40,000 borrowers whose federal student loan debt was reinstated during the COVID-19 pandemic will again have their student loan debt discharged. For another approximately 190,000 borrowers subject to the three-year monitoring period, the burdensome reporting requirement is waived for the duration of the COVID-19 pandemic.

"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," Department of Education Secretary Miguel Cardona said in a news release. "Waiving these requirements will ensure no borrower who is totally and permanently disabled risks having to repay their loans simply because they could not submit paperwork."

However, consumer and disability advocates contend that the administration could be doing far more to discharge student debt for borrowers who meet the “total and permanent disability standard.”

Currently, people who meet this standard must apply to have their debt discharged. As an alternative, advocates, as well as some legislators, are urging the Biden administration to automatically discharge eligible borrowers. Such a program already exists for veterans.

“Let’s be clear: Today’s announcement is not a victory for students,” Alex Elson, an attorney at the National Student Legal Defense Network, told the Washington Post. “There are roughly 400,000 borrowers with disabilities who … are legally owed debt relief. The Department of Education knows exactly who they are but is choosing to do nothing for them.”