Student Loans: Education Department Finally Reforms Rules for Disabled Borrowers

November 30, 2012

Please read this article about debt forgiveness for people with student loans who become disabled published by NASFAA.

While borrowers are eligible to have these loans forgiven, it often requires extensive effort and red tape to verify disability.  As of July 2013, the U. S. Department of Education will require student loan providers to accept award letters for SSI and Title II disability benefits as sufficient evidence of disability.

Student Loans: Education Department Finally Reforms Rules for Disabled Borrowers

“Under federal law, someone who becomes severely disabled after taking out student loans is eligible to have their debt forgiven. But until recently, they’d have to jump through bureaucratic hoops to do so, even if they’d already gone through an essentially identical process to receive Social Security benefits,” PolicyMic reports. “Under a new set of rules, adopted earlier this month, the Education Department will recognize Social Security award letters as proof of disability, streamlining the process immensely. An investigation into the Kafka-esque nightmare of the original process by ProPublica and the Chronicle of Higher Education prompted an internal review by the Education Department, leading eventually to the much-needed reform, which will go into effect on July 1, 2013. Inefficiency and a lack of clarity is one of the major problems with the system of student loans in this country (and there are many). Figuring out the best repayment plan, or which benefits are available, is such a daunting task that many people end up paying far more than they have to, simply because they’re confused or overwhelmed by the vast field of dense, jargon-filled documents. And beyond the student loan conversation, lack of communication between government organizations causes not only headaches for citizens, but waste in government. One of the issues President Obama campaigned on the first time around was redundancy in government – multiple agencies repeatedly reinventing the wheel rather than sharing information and resources.”

NASFAA’s “Financial Aid in the News” section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today’s News does not imply endorsement of the material or guarantee the accuracy of information presented.

Publication Date: 11/20/2012
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