$5.8 Billion in Student Loan Debt Will Be Forgiven for People with Permanent Disabilities

On Thursday, U.S. Secretary of Education Miguel Cardona announced the cancellation of $5.8 billion in student debts for borrowers with a total and permanent disability. The plan is one of the Biden Administration’s most significant efforts to alleviate the student debt crisis.

Cardona stated that the ruling eliminates a “major barrier” that previously prohibited many borrowers with disabilities from obtaining the total and permanent disability discharges to which they are lawfully entitled.

“From day one, I’ve stressed that the Department of Education is a service agency,” Cardona said in a statement from the Department of Education. “We serve students, educators, and families across the country to ensure that educational opportunity is available to all.”

The move will affect around 323,000 Americans who are unable to earn a living owing to their impairment, according to the government.

“We’ve heard loud and clear from borrowers with disabilities and advocates about the need for this change, and we are excited to follow through on it,” Cardona said. “This change reduces red tape with the aim of making processes as simple as possible for borrowers who need support.”

Borrowers whose federal debts will be wiped will be identified through a data match with the Social Security Administration. The department stated that the procedure will begin in September.

Following the reforms’ implementation, borrowers will receive notification of their approval for debt discharge in the coming weeks. The department aims to finalize all clearances by the end of the year.

“With this TPD action, the Biden-Harris Administration has now approved approximately $8.7 billion in student loan discharges for roughly 455,000 borrowers,” the Education Department said in their announcement.

This month, the administration extended a ban on federal student loan payments imposed during the COVID-19 outbreak. The break will now last until January 31, 2022, and will be the Biden Administration’s final prolongation.

While Thursday’s statement is encouraging, President Biden has yet to fulfill his campaign promise to eliminate $10,000 of borrowers’ college debt. According to the Federal Reserve, the aggregate student loan debt in the United States is currently estimated to be $1.7 trillion.