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Biden to cancel US$5.8B student debt for disabled borrowers

SOURCE: JIM WATSON / AFP
The US Department of Education said borrowers will have their debt automatically discharged.


By U2B Staff 

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The Biden administration will be cancelling some 5.8 billion US dollars in student loan debt for more than 323,000 borrowers who are permanently disabled.

The US Department of Education said Thursday (August 19) borrowers would have their debt automatically discharged. 

The change will apply to borrowers who are identified through an existing data match with the Social Security Administration (SSA), it said. It will begin with the September quarterly match with SSA. 

The Department also announced that they will stop asking these borrowers to provide information on their earnings. Failure to respond could result in the reinstatement of loans.

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A clean slate for American with student loan debt

US Secretary of Education Miguel Cardona said the process had been made as simple as possible for borrowers who need support with their student loan debt.

“Today’s action removes a major barrier that prevented far too many borrowers with disabilities from receiving the total and permanent disability discharges they are entitled to under the law,” he said. 

“From day one, I’ve stressed that the Department of Education is a service agency. We serve students, educators, and families across the country to ensure that educational opportunity is available to all. 

“We’ve heard loud and clear from borrowers with disabilities and advocates about the need for this change and we are excited to follow through on it. This change reduces red tape with the aim of making processes as simple as possible for borrowers who need support.”

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Borrowers will not need to fill out an application before receiving relief. Instead, they will be identified through administrative data matching.

“Borrowers will receive notices of their approval for a discharge in the weeks after the match and the Department expects that all discharges will occur by the end of the year,” said the Department. 

Those who wish to opt out of their discharge will be able to do so. 

Borrowers won’t face federal income taxes on the student loan debt relief, but there may be some state income tax consequences.