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Department of Education to Forgive Student Loan Debt for Thousands of People with Disabilities

April 20, 2016

Nearly 400,000 people with disabilities (many who are seniors) breathed a sigh of relief last week when the Obama Administration and the Department of Education announced a program that will make it easier for people with permanent disabilities who receive Social Security Disability Insurance to apply to have their federal student loans forgiven.

Previously, people with disabilities who collect Social Security or Social Security Disability Insurance were eligible to apply for a discharge of federal student loan obligations due to a “total and permanent disability,” but few knew of the law or how to demonstrate they met this high standard. With the change last week, the Department of Education will begin working with the Social Security Administration to identify individuals who receive disability benefits and have a designation of permanently disabled (“medical improvement not expected”) and who have outstanding student loans.

Those individuals will receive a letter explaining how they can get their student loans discharged without having to provide additional documentation proving they meet the “totally and permanently disabled” standard. Before pursuing a discharge, individuals should read this FAQ outlining the tax and health insurance consequences for themselves and others in their household, since the amount of the student loan forgiven may be treated as income for tax purposes.

Unfortunately, the 160,000 elderly Social Security beneficiaries who do not have a designation of having a total and permanent disability, may continue to have their Social Security benefits garnished. Last fall, Justice in Aging, and 20 other organizations, sent around a petition to end the practice of garnishing all Social Security benefits. If you were one of the 375,000 people who signed it, thank you. You played a part in last week’s announcement.

We’re pleased at last week’s outcome, and would like to see the program expanded to provide relief to the thousands of elderly beneficiaries who depend on their Social Security benefits to meet their basic needs. We support a bill introduced by Senator Wyden, S. 2387, the Protection of Social Security Benefits Restoration Act, and the companion bill just introduced in the House this week by Rep. Patrick Murphy, HR 4988. This legislation would end the garnishment of all Social Security benefits for any debt to the federal government, including federal student loans.

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