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Automatic student loan discharges for totally and permanently disabled borrowers
August 19, 2021
Borrowers who have a total and permanent disability will receive automatic student loan discharges under a new regulation announced August 19 by the Department of Education.
According to the Department, more than 323,000 borrowers will receive approximately $5.8 billion in automatic student loan discharges. The new regulation applies to borrowers who are identified through a data match with the Social Security Administration (SSA).
According to the announcement, this new regulation allows the Department to provide automatic TPD discharges for borrowers who are identified through administrative data matching by removing the requirement for these borrowers to fill out an application before receiving relief.
This change will go into effect with the Department's next quarterly data match with the SSA in September.
In addition to the automatic loan discharges, the Department announced two other policy changes:
- Extension of the policy announced in March to stop asking borrowers to provide information about their earnings beyond the end of the national emergency.
- An effort in upcoming negotiated rulemaking to pursue elimination of the three-year monitoring period required under current regulations.
According to the Department, a 2016 report by the Government Accountability Office found that 98 percent of reinstated disability discharges occurred because borrowers did not submit the requested documentation, not because their earnings were too high.