Almost 400000 Disabled Borrowers May Have Student Loans Forgiven

Obama Makes It Easier for Some People to Pay Student Debt

President Obama's Department of Education is set to take on the huge task of identifying and forgiving the federal student loan debt of 400,000 permanently disabled Americans.

Under Secretary Mitchell said that the current system is "not how government should work".

The Obama administration plans to forgive student loans for permanently disabled Americans starting as early as next week, by notifying eligible student loan holders that they can potentially have their student loans forgiven entirely by the Federal government. Disabled borrowers generally must provide documentation that proves that they are disabled, whereas those who receive the letter will not have this requirement.

Under Secretary of Education Ted Mitchell says too few borrowers have been taking advantage of the program because they may not know about it or the process of applying was too complicated. "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".

Letters from the department will be sent to about 387,000 people who the agency has identified as eligible - loans worth about $7.8 billion. It took her seven years of repeated attempts to get a disability discharge. Even if they get their debt forgiven, it's usually taxed, sending disabled borrowers burdensome tax bills - and even though the tax debt is usually a small fraction of the initial student loan debt, this policy effectively makes them trade debt for debt, the New York Times reported in 2014.

Hundreds of thousands of permanently disabled people are eligible for a student loan pardon through the Obama administration. "These are people who are struggling with health issues". If the borrower's earning status changes and increases above a certain threshold, he or she may have to start making payments again. Borrowers who get S.S.D.I. and whose disability is considered permanent can get their student loan debt discharged.

Yu added that this new effort is still imperfect, noting that those who suffer psychological disabilities such as Alzheimer's may be incapable of understanding the application. Borrowers who successfully apply for the program will have their disability payments or Social Security protected.

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