The Department of Education pledged to overhaul its troubled loan forgiveness program for disabled borrowers. Currently the system is so dysfunctional that many borrowers either give up or are denied loan forgiveness for unclear reasons, ProPublica reports.
The system was designed to forgive the debt of student loan borrowers who become totally and permanently disabled. Many of these borrowers qualify for Social Security Disability benefits but find it hard to have their federal student loans forgiven. There is a lack of transparency in the department’s process for determining disability and the process duplicates similar disability determinations done by agencies such as the Social Security Administration.
The department pledged to implement changes quickly and is deciding whether it will accept disability determinations made by the Social Security Administration and other agencies, ProPublica reports. The department said that it will review its procedures for disability discharge within the next 90 days. The review will identify what steps in the disability discharge process are burdensome for applicants. The department will also not garnish Social Security Disability benefits to pay down student loans.
There is a possibility that the agency would forgo its disability determination program altogether and simply rely on other agencies to review all applications. An Education department ombudsman recommended substantially similar reforms almost three years ago, but these recommendations were ignored.
Change will likely be slow even with the department’s new focus on the problem. The Education Department is set to release proposed rules in the summer and it will likely take a year for the rules to be finalized and enacted.
Source: ProPublica, “Education Dept. Pledges to Overhaul Dysfunctional Disability Review Program,” Sasha Chavkin, 2/24/11