According to NerdWallet, Biden’s student loan forgiveness could wipe out debt for 15 million borrowers. More than a third of federal borrowers could see their balances fall to zero with $10,000 in debt cancellation. However, for now, the forgiveness only extends to students with total and permanent disability and students under a federal law called the borrower defense to repayment.
Find out if your disabilities qualify for student loan forgiveness.
Is “Forgiveness” the Same as “Discharged” Student Loan Debt?
According to StudentAid.gov., the terms forgiveness, cancellation, and discharge mean nearly the same thing. If you’re no longer required to pay on your loans due to your job, this forgiveness or cancellation. If you’re no longer required to pay on your loans due to a total and permanent disability or the closure of the school where you received your loans, this is discharge.
Borrower Defense to Repayment
Under the borrower defense federal law, students received some federal student loan discharge if they attended a school that engaged in deceptive or illegal practices or closed suddenly. This relief began under the Obama administration who sought to protect student borrowers from deceptive student loan practices. This consumer protection helped student loan borrowers promised gainful employment after attending a school that closed suddenly.
Complete and Total Disability
Biden extended the relief for these defrauded borrowers and also issued relief to students with complete and total disability. The Federal government has long required these students with disabilities to submit documents during a 3-year monitoring period. Many students lost their loan discharge status because of not submitting their documentation.
Biden has now waived the annual earnings documentation and has given these students freedom from filing. Providing the documentation was even more difficult because of disabilities and the covid pandemic. The Feds have now reinstated the students who lost their status due to lack of filing. They are now once again in good standing with the discharged loan program.
What Disabilities Qualify for Student Loan Forgiveness?
You can show that you qualify for a Total and Permanent Disability discharge by providing documentation from one of three sources:
- U.S. Department of Veterans Affairs (VA)
- Social Security Administration (SSA)
- A physician
There are specific requirements for each type of supporting documentation that you can submit to show your eligibility.
For a physician discharge of student loans, your doctor must be a licensed M.D or D.O. in the United States. The doctor must make certifications on the TPD discharge application that certify that you cannot perform any “substantial gainful activity” because of physical or mental impairment that meets one of these qualifications:
- can be expected to result in death
- has lasted for a continuous period of at least 60 months
- can be expected to last for a continuous period of at least 60 months
This type of discharge for complete and total disability is only available for student loans in these programs:
- William D. Ford Federal Direct Loan (Direct Loan) Program loans
- Federal Family Education Loan (FFEL) Program loans
- Federal Perkins Loan Program loans
- (TEACH) Grant Program Service Obligations
The Future is Bright
Biden has already canceled $2.3 billion of student loans for close to 115,000 student loan borrowers. However, this is only a tiny fraction of one percent of the total outstanding student loan debt owed in the US. As a student borrower, it may become more possible to sue your student loan service provider or lender for damages or, at the very least, win a bankruptcy suit against them. According to Forbes, “Student loan servicers also could face increased scrutiny in the Biden administration. A federal judge recently found that Navient, which services $300 billion of student loans, misled student loan borrowers.”
It is also possible that more debt cancellation is on its way for Federal and private student loan borrowers. There has already been a 2021 stimulus plan that includes no taxes for any discharged student debt through 2025. However, if you are not one of the lucky ones given a zero balance so far, look for more good news coming down the line. More people are waking up to the fact that student borrowers are not wholly guilty of the high level of student debt in our country.
It is also widely known that a large amount of the debt is already in default. These students cannot or will not pay their loans regardless of loan forgiveness. If this is the case, why punish so many with bad credit when a student loan bailout really would not make a difference in the overall financial picture?
If you are permanently and totally disabled and need help qualifying for the discharge of your student loans, contact our knowledgeable attorneys at LawZebra. We fight for your rights when you are at your most vulnerable. If you believe your loan servicer or creditor has defrauded you in some way by lying, deceiving, or overcharging you, contact our experienced attorneys. Our focus is consumer rights protection, and our network of attorneys spans the country. Contact us today online or by phone.