Complete and Permanent Disability (TPD) borrowers face costly delays and bureaucratic obstacles in order to receive a benefit to which they are entitled under the University Act of 1965
August 5, 2021
WASHINGTON, DC – Yesterday the US Senators Rob Portman (R-OH), Chris Coons (D-DE), Angus King (I-ME) and Tammy Duckworth (D-IL) as well as the US Representatives Ron Kind (D-WI) and Brian Fitzpatrick (R-PA) signed a bipartisan, bicameral letter urging US Department of Education Secretary Miguel Cardona to press ahead with rulemaking to address the outstanding student loans of more than 517,000 Americans with a total and permanent disability ( TPD) to be replaced automatically.
While the Higher Education Act of 1965 allows individuals with a TPD to have their outstanding federal student loan waived, these borrowers face significant challenges that are both administratively burdensome and unnecessary in the application and income monitoring process. Unfortunately, this has resulted in hundreds of thousands of eligible borrowers failing to get the debt relief they deserve. However, many of these applicable rules are not set out by law, which means that the Department of Education has the power to change the terms of the TPD program and automatically process student loan disbursements for borrowers with a TPD as soon as they are identified.
“Although the ministry has improved the TPD process in recent years, more can be done to address inequalities and pressures in the program. As a result, we continue to conduct bipartisan, bicameral efforts so that Americans no longer have costly delays or bureaucratic obstacles to get what they are legally entitled to. “ wrote the legislature. “The Department can eliminate unnecessary paperwork and provide quick relief to borrowers with a tentative final rule to automate layoffs under the TPD program. We continue to urge the Ministry to comply with our request as soon as possible. “
A NOTICE: In 2017, Portmans Law to End the Taxation of Death and Disability, a bill to repeal the federal tax penalty on federal student loans dismissed due to death or total and permanent disability, has been enacted. He has also signed several letters that have been sent February 2018 and October 2019 or to the Department of Education requesting the Department to automatically complete the student loan settlement process as soon as a borrower is identified through appropriate agreements with the Department of Veterans Affairs (VA) and the Social Security Administration (SSA). In December 2019, Portman, and a bipartisan group of lawmakers urged the acting Inspector General of the Department of Education to end the federal student loan process for Americans with a TPD in response to an alarming one report by National Public Radio, which found that between March 2016 and September 2019, only 28 percent of borrowers identified by the SSA data match as eligible for TPD relief have actually repaid their loans or are on track to do so to achieve this. In April of this year, Portman did introduced bipartisan, bicameral legislation that would allow a parent whose child develops complete and permanent disability to qualify for a student loan dismissal.
The letter is available here and is copied below.
4th August 2021
The Honorable Miguel Cardona
Minister of Education
US Department of Education
400 Maryland Avenue, SW
Washington, DC 20202
Dear Secretary Cardona:
We are writing to request the US Department of Education (“Department”) to automatically redeem (TPD) the loans of more than 517,000 student loan borrowers classified as Totally and Permanently Disabled by the Social Security Administration (SSA). Section 437 (a) of the Higher Education Act 1965 allows those with a TPD to be eligible for waiver of their outstanding federal student loan. Under the Tax Cuts and Jobs Act of 2017, federal student loans paid due to death or TPD are exempt from federal income tax. Additionally, the Fostering Undergraduate Talent by Unlocking Resources for Education Act of 2019 (FUTURE Act) requires the department to streamline the TPD student loan relief process. Although the Department has improved the TPD process in recent years, more can be done to address inequalities and pressures in the program. As a result, we continue to conduct bipartisan, bicameral efforts so that Americans no longer have costly delays or bureaucratic obstacles to receive a benefit they are legally entitled to.
The department is currently using data provided under reconciliation agreements with the SSA and the Department of Veterans Affairs (VA) to identify disabled federal student loan borrowers who may be eligible for TPD student loan relief. Once notified, these borrowers will need to apply for discharge, and if the borrower has been matched through the SSA, they will need to undergo three years of income monitoring to ensure they are still out of income and will need to submit additional documentation to complete the process . If the borrower does not meet the income requirements or fails to provide the required papers, the ministry will restore the borrower’s obligation to repay the repaid loans. However, the requirements for submitting an application and controlling income are not regulated by law. As such, the department has full authority to amend regulations and automatically process student loan disbursements for borrowers with a TPD.
On August 21, 2019, President Trump signed a presidential memorandum instructing the Secretary of Education and Secretary of State for Veterans Affairs to change regulations to automatically settle federal student loan debt for veterans using a TPD. The ministry was quick to enact new rules, “realizing that there is a good reason for a provisional final settlement and that it is in the public interest”. However, the memorandum did not apply to the hundreds of thousands of borrowers matched by SSA data even though they were in the same circumstances. It is unnecessary and contrary to the public interest to go through lengthy rules of negotiation in order to grant borrowers with severe disabilities the relief they are entitled to by law if information is already available to the federal government to verify their eligibility.
Therefore, as soon as possible, the department should adopt a provisional final rule that will (1) provide automatic student loan relief for those who have deposited a TPD designation with the SSA by abolishing the application process and (2) abolishing the monitoring phase . Eligible borrowers should then receive their loan waivers quickly after their initial disability determination is confirmed by the SSA, and no later than 90 days. By eliminating the application and monitoring period, the procedure for borrowers with an SSA designation will be aligned with the procedure that applies to borrowers with a VA designation.
The Department can eliminate unnecessary paperwork and provide quick relief to borrowers with a tentative final rule to automate layoffs under the TPD program. We continue to urge the Ministry to comply with our request as soon as possible and ask for a response to this letter by August 30, 2021 at the latest. For your information, we have attached the letters dated February 15, 2018, October 9, 2018 . 2019 and December 6, 2019 that we sent to the previous administration.