The U.S. Education Department is canceling student debt for more than 40,000 Americans who were previously granted loan forgiveness because of disabilities but later had their debt reinstated after they failed to submit specific paperwork, the agency announced Monday.
The action targets a loan forgiveness program that aims to help people with disabilities but that critics say carries overly burdensome rules. After being granted loan forgiveness, borrowers are required to submit documentation of their earnings for three years. If their profits go beyond certain thresholds — or they fail to submit documentation — they’re back on the hook for their loans.
Acknowledging the program’s challenges, the Education Department said it would relax the rules during the coronavirus pandemic and consider other changes to the reporting requirements in the future. Until the federal government declares an end to the pandemic, more than 190,000 borrowers now in the three-year monitoring period will not be required to submit proof of their earnings, the agency said. Another 41,000 who had debt reinstated over paperwork issues will again get loan forgiveness, amounting to a combined $1.3 billion.
Education Secretary Miguel Cardona said borrowers with disabilities should not “put their health on the line” to submit earnings information. The measure was a disappointment to advocates who have called for a total overhaul of the program. A Washington legal group, Student Defense, said the action helps a small fraction of borrowers eligible for the program. The group has urged Biden to automatically clear loans for all qualified borrowers and permanently eliminate the monitoring period.