As many individuals have student loans in the tens of thousands, the trillions of dollars in total U.S. student loan debt is an ever growing national crisis. Interest on a student loan accrues daily and many student loan debtors have difficulty making regular, minimum payments. Generally, student loans may only be discharged in rare circumstances and may not be discharged in bankruptcy. However, in August of 2016, the U.S. Department of Education ("DOE") announced it had targeted almost 400,000 individuals for total and permanent disability discharges.
While student loan debtors may postpone payments on student loans either through a deferment or forbearance, thus resulting in some short-term relief for debtors experiencing temporary financial hardship, they don't allow repayment of the loan. Also, interest on a loan typically continues to accrue even while payments are postponed. Thus, when payments resume, the loan balance will be even higher.
However, the DOE has reached out to hundreds of thousands of student loan debtors with its April, 2016 announcement that it had identified 387,000 people as being eligible for a total and permanent disability discharge, which is a designation that allows federal student loan debtors to have their student loans forgiven. Please go to this link for a copy of the letter.
The DOE's announcement included a new process for proactively assisting disabled borrowers who may be eligible for a Total and Permanent Disability (TPD) loan discharge. This program was requested by President Obama in his Student Aid Bill of Rights. According to the DOE, the proactive identification and engagement of borrowers who may be eligible for TPD loan discharge ensures that totally and permanently disabled borrowers have the information needed to avail themselves of the debt relief to which they are entitled.
As a result of this process, these 387,000 borrowers may forego the typical application process for receiving a disability discharge, which requires compiling documented proof of a disability. Instead, the borrower simply has to sign and return the completed application enclosed in the letter.
According to the DOE, if every borrower chooses to have his or her debt forgiven, the government will discharge more than $7.7 billion in student loan debt. Ted Mitchell, the undersecretary of education, said “Americans with disabilities have a right to student loan relief, and we need to make it easier, not harder, for them to receive the benefits they are due.”
Almost half of the eligible borrowers, 179,000, are in default on their loans, and more than 100,000 of these borrowers are at risk of having their tax refunds or Social Security checks garnished to pay the debt. What's sad and unfortunate is that borrowers aren’t even aware that they’re eligible for a disability discharge. Those that do know are faced with a complicated process which leaves applicants with the assumption that their application will be denied.Student loans may have both short-term and long-term financial consequences and effects. Whether you are married or single, the experienced South Florida defense attorneys at Loan Lawyers are here to assist you in resolving any issues relating to the repayment of your student loans. To schedule a free consultation at any of our three conveniently located offices, contact Loan Lawyers today by calling (888) FIGHT-13 (344-4813).