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Student loan debt and SSDI

The Education Department has announced new standards for its program that forgives student loan debt for borrowers who become disabled. The department is obligated by federal law to forgive loan debt for people who have severe, long term disabilities that make it difficult or impossible for them to work to pay those loans off.

Unfortunately the Education Department rejected proposals from a variety of disability advocacy groups to accept the findings of the Social Security Administration's disability insurance program.

Officials from the Education Department say that this is because the two standards are different. However, recent legal reform has eased the standard for loan forgiveness, now providing the option to people who are fully disabled for five years. This update makes it much closer to the SSDI standard which requires that workers be unable to work for at least a year and have a disability that is not expected to improve to the point of being able to work.

Experts say that the Education Department should still work to find a way to coordinate the application and review process with the Social Security Administration and to adopt similar standards in evaluating disabilities. Streamlining the process in this way would help people with disabilities get the financial support that they need while also discharging burdensome debt for an education they can no longer leverage for higher wages.

One major improvement under the current reforms is that the Education Department must now tell applicants why they were denied in a detailed letter. This information will likely help many applicants have success on an appeal or re-application.

The reforms were adopted following an investigation by reporters from National Public Radio's Pro Publica group which revealed a dysfunctional department that was not serving disabled students properly.

Source: Pro Publica, "Education Department Revamps Broken Disability Review Program," Sasha Chavkin, July 19, 2012.

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