NAICU Washington Update

Borrowers with Disabilities Get Relief from Department

April 02, 2021

Borrowers who have received student loan discharges due to a total and permanent disability got needed relief this week from the Department of Education.  The Department announced it would no longer require these borrowers to submit earnings documentation for the duration of the COVID-19 emergency. This change will be made retroactive to March 13, 2020, the start of the COVID-19 national emergency. 
The Higher Education Act allows for federal student loan borrowers who are totally or permanently disabled to receive a full discharge of their loans or Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligations.  This discharge is known as a Total and Permanent Disability Discharge (TPD). Before a borrower’s federal student loans or TEACH Grant service obligations can be discharged, they must provide information to the Department to prove they are totally and permanently disabled. The Department will evaluate the information and determine if a borrower qualifies for a TPD discharge.

Borrowers receiving this discharge are, by regulation, subject to a three-year monitoring period, unless it is through a process coordinated through the Department of Veterans Affairs. During this time, borrowers must provide the Department with information about their earnings from employment.

Per regulation, borrowers will have their loans reinstated if they have earnings that exceed certain thresholds and do not meet certain other criteria. However, a 2016 report by the Government Accountability Office found that 98% of reinstated disability discharges occurred not because earnings were too high, but because borrowers simply did not submit the requested documentation. 

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