Biden Administration Eliminates Student Loan Debt for Americans with Severe Disabilities

The Biden administration recently announced it would automatically eliminate federal student loan debt for people with severe disabilities. That will effectively eliminate more than $5.8 billion of student loan debt payments for over 300,000 Americans with total and permanent disabilities. This move comes after many years of complaints from borrowers with disabilities and advocates about conflicting policies and strict rules that affect disabled people.

Why the Move Matters

Severe disabilities limit the income that people can earn. An attorney for disability claims sees many cases of people with disabling conditions, which make them unable to work, facing financial challenges like avoiding bankruptcy and managing debt. With the average Social Security Disability Insurance (SSDI) monthly income being less than $1,300, beneficiaries are not left with much room for making debt payments while meeting their food, healthcare and housing needs as well as the needs of their dependents.

Research has shown that many beneficiaries have missed payments like credit card or loan payments and mortgage payments. Therefore, the new action is significant for hundreds of thousands of Americans who can now avoid getting caught in cycles of debt.

Shortcomings of the Current Program

The federal government already had a student debt relief program for people with total and permanent disabilities and limited incomes. However, the existing rules required people to provide documentation of their disabling condition and undergo a monitoring period of three years to prove their limited incomes.

Thousands of individuals have been removed from the program, and their student loans have been restored because of being unable to prove their earnings. A Government Accountability Office (GAO) report found that in 98% of the cases where loans were reinstated, the primary reason was borrowers failing to submit the necessary paperwork and not because of them having too high earnings.

The program has long been criticized because its rules are burdensome and complex, such that they deter people from applying. Advocates have been pressing the Department of Education to remove the monitoring period and provide automatic student debt relief for individuals who have already been determined to be disabled by the Social Security Administration (SSA).

Under the new move, people the SSA has identified as having a permanent disability will have their debt erased automatically. An attorney for disability claims can provide assistance and more information to anyone who needs help with qualifying for disability benefits to be eligible for the student loan discharges.