Obama Administration Moves to Help People With Disabilites Apply for Loan Forgiveness

On Monday, April 18, the Obama administration began the process of sending letters to almost 400,000 people with permanent disabilities to help them in the process of discharging their student loans.

A new process for the identification of those eligible for an existing federal loan forgiveness program for those who are severely disabled and unable to work was announced just last week by the U.S. Department of Education.

The letter campaign includes about 387,000 people that the Department has identified as eligible — 179,000 of those people have already defaulted on their loans.

It is estimated that the loans eligible for forgiveness amount to nearly $7.8 billion. That should come as no surprise considering the cost of public, and even private, tuition. The College Board reports that the average cost of tuition and fees for the 2014-2015 school year was $31,231 for private schools and $9,139 for public schools.

Ted Mitchell, the Undersecretary of Education, said that few borrowers have used the existing forgiveness program because they might not have known about it, or found it too confusing to apply for.

“These are people who are struggling with health issues. We want to take one worry off their plate,” said Mitchell.

The letters sent out this Monday included an application to be signed and returned. The recipients would not have to provide any documentation proving their eligibility.

Unfortunately, there is to be a three-year monitoring period — if an eligible person makes about a certain amount, they will have to start making payments again.

But for many people, the notification will come as a huge relief.

“This matching program is critical to help student-loan borrowers get the relief they are entitled to,” said Persis Yu, a project director at the National Consumer Law Center. “Many Social Security Disability recipients qualify for loan cancellation, yet most do not know about the discharge program.”

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