Individuals with disabilities that have student debt may be in luck. On March 29, 2021, due to the COVID-19 emergency, the Department of Education announced that people with total and permanent disabilities (TPD) are eligible for relief on their student debt repayments, regardless of their discharge status. For borrowers to become eligible for a total and permanent disability discharge, under current law, they must complete an application and then submit three years’ worth of income statements to prove eligibility. Some federal student loan discharges that were granted to individuals with total and permanent disabilities were reversed and the loans were reinstated on or after March 13, 2020, due to failure of submitting annual income certification over the pandemic.
The requirement to submit documentation of earnings for the three-year income monitoring period has now been waived, which will help 41,000 people that had over $1.3 million in student loans reinstated due to failure of submitting the required paperwork. They will have their discharges reinstated, be reimbursed for any payments made during the pandemic, and will not be asked to submit earnings documentation that was required during this timeframe. An additional 190,000 borrowers will also be positively impacted, and will receive a waiver of the income verification requirement for the three-year period, as well.
Individuals whose earnings were too high to receive forgiveness will still be required to repay their loans; however, the vast majority of reinstated disability discharges were due to failure of documentation submission, not exceeding the income threshold. The waiver for income verification will start retroactively from March 13, 2020. All loan reinstatements that were made due to lack of earnings information submitted during this period will be reversed and borrowers will not be required to submit earnings made during this period in the future. The status of loans that were reinstated due to lack of earnings statements should be switched to discharged within the coming weeks. The Department is considering the means of future income monitoring for individuals with a total and permanent disability discharge.
This effort is one of the Biden-Harris student loan forgiveness initiatives providing support and protection during the COVID-19 emergency. The hardship of having to submit documentation in order to receive a discharge from student debt due to a permanent disability is difficult enough, but even more so during a global crisis, so hopefully this small victory is one of many to come under the new administration.
To learn how to apply for a TPD discharge, please visit Coronavirus and Forbearance Info for Students, Borrowers, and Parents. For more information on the amendments to federal student aid requirements as they pertain to the TPD discharge, please visit Total and Permanent Disability Discharge.
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