Wednesday, April 13, 2016

Feds will forgive student loans of disabled borrowers: Doing the right thing in the right way (cutting through red tape)

The Department of Education announced this week that it will write customized letters to 387,000 disabled student-loan borrowers to inform them they are eligible for loan forgiveness. Good for the feds. DOE regulations authorize student-loan forgiveness for borrowers who are permanently disabled, but most people eligible for forgiveness don't apply. In fact, according to an Inside Higher Ed article, almost half of all disabled borrowers (179,000) are in default!

I applaud DOE for doing the right thing and reaching out to people who are entitled to have their student loans forgiven. This is a stark and pleasing contrast to the Department's position in Myhre v. U.S. Department of Education, when DOE opposed bankruptcy discharge for a quadriplegic debtor whose expenses exceeded his income because he had to pay a full-time caregiver to feed, dress, and bathe him.

Apparently, DOE is going to streamline the loan-forgiveness process for disabled borrowers. According to an article by Jillian Berman in Marketwatch:
The borrowers identified by the Department won’t have to go through the typical application process for receiving a disability discharge, which requires sending in documented proof of their disability. Instead, the borrower will simply have to sign and return the completed application enclosed in the letter.
DOE is to be commended for cutting through red tape to forgive these loans.  Perhaps this streamlined approach can be expanded to include student-loan borrowers who were defrauded by the college they attended--particularly students who attended one of the Corinthian Colleges institutions. Thousands of former Corinthian students have applied for loan forgiveness, but the administrative process has been tedious.

This latest development provides more evidence of the massive suffering experienced by millions of distressed student-loan borrowers. Nearly 400,000 of them are permanently disabled!


Jillian Berman. Why Obama is forgiving the student loans of almost 400,000 people., April 13, 2016. Accessible at


  1. Richard, As I opened my email today I saw your article and an article from Steve Rhode on the exact topic! Here is the link to Steve's fine article on this timely and historic decision: Best regards, Richard Precht

  2. Having been denied a TDP (twice) I hope those who are deserving do get their loans forgiven. Most of the disabled are living on SSDI or probably at the poverty level. I was on SSDI and my loans were deferred as long as I was on SSDI. When I reached full retirement age Social Security did not inform me that I would be no longer on SSDI they just took me off of it and started to pay me regular Social Security Annuity paymnents. That is when I got a notice from the DOE that I owed nearly $97,000.00 on my student loan. There is no doubt that many of these on disability have had there balances balloon out of sight and that is way the DOE is calling for them to be forgiven to help lower the overall indebtedness?

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