The Obama administration is making right on another one of his promises by forgiving $7.7 billion in federal loans. This will go to nearly 400,000 permanently disabled Americans.
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This means that anyone who is living with a severe disability will be eligible to have the government discharge their federal loans. The plan first started four years ago, when the process allowed people who are totally and permanently disabled to use their SSN designation to apply for discharge. However, few took advantage of the offer, according to The Washington Post.
The Department of Education is now working to identify those who are eligible for the forgiveness.
“Too many eligible borrowers were falling through the cracks, unaware they were eligible for relief,” said Education Under Secretary Ted Mitchell in a statement. “Americans with disabilities have a right to student loan relief. And we need to make it easier, not harder, for them to receive the benefits they are due.”
People who work with the SSA should have a designation of "Medical Improvement Not Expected" which means they would be eligible. The agencies found that there are 387,000 people who meet that criteria. Of those, 179,000 are defaulting on their loans, which means they could lose their tax refunds and have their Social Security benefits garnished.
“The creation of the matching program is a great first step, but the administration needs to go further to ensure that no borrower who has a right to student loan relief has their benefits taken,” said Persis Yu, the National Consumer Law Center’s student loan borrower assistance project director. “Borrowers receiving SSDI need these payments to survive.”
Letters will go out next week to borrowers who are identified as being eligible for the program. The government will help them with the steps needed to receive the discharge. People who receive the letter are not required to submit documentation of their eligibility. Notification letters will be sent over a 16-week period, and followed up with a second letter after 120 days.
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Tuesday’s announcement part of President Obama’s Student Aid Bill of Rights.