Biden Administration Will Wipe Out $5.8B in Student Loan Debt for 300,000 Disabled Borrowers

On Thursday, President Joe Biden’s administration announced that it would automatically wipe out federal student loans for 323,000 borrowers who are disabled.

Forbes reported that the cancellation of the loan debts would go through the Total and Permanent Disability discharge program. The program is for student loan borrowers who cannot maintain substantial, gainful employment due to a physical or psychological medical impairment and are therefore unable to repay their loans.

However, the well-needed program can be a challenge for those that qualify. Borrowers must submit a formal application, which may be hard for those who have serious health issues. Furthermore, some may not even realize they are eligible for the relief.

Supporters of the program have argued that the Department of Education has the right and ability to automatically grant TPD Discharges to those that already receive disability benefits through Social Security.

The Social Security Administration has already identified hundreds of thousands who owe student loans but are considered disabled, saying they would qualify for Biden’s TPD discharge program. The agency has handed over this information to the Department of Education, but it has not acted on it.

As of Thursday, that changed. The department will now move forward by automatically discharging $5.8 billion in federal student loans for those disabled borrowers that the SSA says are eligible.

Secretary of Education Miguel Cardona described the move as “in alignment with our strategies from day one to put our borrowers at the center of the conversation… Today’s action removes a major barrier that prevented far too many borrowers with disabilities from receiving the total and permanent disability discharges they are entitled to under the law,” he said.

The Biden administration has made additional efforts surrounding federal student loan forgiveness under other programs, including recently canceling $500 million in federal student loans through the Borrower Defense to Repayment program.

Advocates praised the announcement. “This is a life-altering announcement for hundreds of thousands of student loan borrowers with disabilities,” said Student Defense Vice President and Chief Counsel Dan Zibel in a statement. “We have long been calling on the Department to take this step and eliminate unnecessary red tape that has kept too many people caught in a cycle of debt. Today’s step is another indication that the Department is listening to the voices of student loan borrowers.”

“We are excited to see the Department of Education finally provide automatic discharges to the hundreds of thousands of disabled borrowers who have been entitled to this relief for years,” said Persis Yu, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project, in a statement. “This action is long overdue and will make a huge difference in the lives of hundreds of thousands of borrowers who have been trapped in unnecessary student debt.”