Ministry of Education waives student loans thanks to TPD discharge
On March 29, the Biden administration announced that it would forgive more than $ 1.3 billion in student loan debt from totally and permanently incapacitated borrowers. The move will impact more than 230,000 borrowers and allow them to focus their financial resources elsewhere, as many have been hit hard by the COVID-19 pandemic.
What is the total and permanent disability discharge?
This decision by the Biden administration concerns what is known as the Total and Permanent Disability Discharge (TPD). Through this program, student loan borrowers who become totally and permanently disabled can have their federal student loan balances canceled.
Prior to Monday’s Education Ministry announcement, borrowers were required to submit three years of requested documents to prove they met the income requirements for full and permanent disability release. If a borrower’s income exceeded the poverty line amount for a family of two in his condition, or if he failed to submit the requested documents, previously released loans would be reinstated.
A report by the Government Accountability Office found that 98 percent of disability claims were reinstated not because of increases in income, but because of documentation issues. For this reason, the Ministry of Education has decided to waive documentation requirements for the duration of the COVID-19 crisis.
Totally and permanently disabled borrowers can more easily qualify
With these latest reforms of the TPD landfill, eligible borrowers will not be required to submit income documents for the duration of the COVID-19 emergency. In addition, borrowers whose loans have been reinstated will receive their discharge and receive repayments for any payments made after March 13, 2020.
“Waiving these requirements will ensure that no totally and permanently disabled borrower is at risk of having to repay their loans simply because they could not submit documents,” Education Secretary Miguel Cardona said. , in a recent press release. Press release. “Borrowers with total and permanent disabilities should focus on their well-being, not putting their health on the line when submitting income information during the COVID-19 emergency. “
If you are part of an affected group, you should receive a communication from your agent in the coming weeks.
Biden administration to take a closer look at broader student loan cancellation
The Biden administration appears to be targeting specific groups for student loan cancellation – last week it canceled loans from borrowers who had been subjected to deceptive college practices – but it has yet to make an announcement on massive loan cancellation.
“We are still reviewing our student loan options,” White House press secretary Jen Psaki said on Tuesday. press conference. “This includes reviewing the authorities we have, existing loan cancellation programs that are clearly not working as well as they should. This includes the borrower’s defense, total and permanent disability costs.
Biden has long considered the idea of setting aside $ 10,000 per federal student loan borrower, and Psaki said such a proposal was still on the table. “The president continues to call on Congress to write off $ 10,000 in debt for student loan borrowers,” she said. “This is something that Congress could take action on, and he would be happy to sign on.” In the meantime, a provision has been added to the latest stimulus bill which makes student loan forgiveness tax free until 2025.