Last week we dug through the details of a White House announcement claiming that President Biden was “canceling” student debt for all sorts of people. Of course, when you looked into the fine print, you quickly realized that almost nobody was having their debt canceled, or at least not for quite a few years. Mostly it was a process of rearranging the deck chairs on the Titanic and pushing some due dates back or removing fees that had been imposed. This week, another announcement arrived along the same lines, but it appears to have significantly more meat on the bone. More than a quarter of a million people with delinquent student loans are having debts totaling roughly 7 billion dollars wiped out. But before you start ordering your party supplies, you’ll need to look into the details. As usual, there are caveats, and you would have to qualify under some very specific conditions before you see your debt go away. And there’s an even uglier truth underneath it all that we’ll unveil here. (Yahoo Finance)
The Biden administration recently announced that it has cancelled $7 billion in federal student loan debt for some 350,000 borrowers with disabilities through a data-sharing initiative between the Social Security Administration (SSA) and the Education Department.
Through sharing information of individuals who were receiving benefits from the SSA, qualification for the Total and Permanent Disability (TPD) discharge program could be confirmed and student loans automatically cancelled.
In a tweet, Chief Operating Officer of Federal Student Aid (and undefeated five-time Jeopardy! champion) Richard Cordray wrote, “Working together with @SocialSecurity, Federal Student Aid has provided much-needed relief for 350,000 borrowers with approximately $7 billion in student loans.”
We’ll save the big caveat for the end, but in case you are hoping that you are one of the beneficiaries of this relief, here’s what you need to be able to show to qualify. First of all, you have to be a recipient of benefits from the Social Security Administration. On top of that, you have to have already qualified for Total and Permanent Disability (TPD) from the SSA. If you fall into that category and have outstanding and/or delinquent student loan debts, then you may be all set. But you also have to have the right sort of loan.
Your loan must fall into one of the following loan categories, so go get your paperwork out and check:
- William D. Ford Federal Direct Loan (Direct Loan) Program loans
- Federal Family Education Loan (FFEL) Program loans
- Federal Perkins Loan (Perkins Loan) Program loans
- Teacher Education Assistance for College and Higher Education (TEACH) Grant Program
If you meet all of those loan requirements, your debt is already in the process of being canceled automatically. That means you shouldn’t have to do anything, but if you don’t receive a notice soon, you might want to place some calls. This is still the federal government we’re talking about after all.
But now here’s the caveat (and the serious kick-in-the-pants) I referenced above. Let’s say you are someone receiving TPD benefits from the SSA and you’ve been struggling all of this time to make payments on your student debt but kept falling behind. You’re probably excited to learn that your debt is going to finally be wiped out, right? But the fact is that you were already qualified to have your debt erased and you have been ever since you started receiving TPD benefits. The problem is that the system was so badly constructed that the government did a terrible job in communicating those qualifications to the public and you wouldn’t have known about it unless you were able to do some very deep research into the rules.
The only reason it’s happening now is that they finally developed an automated data analysis system matching up all of the people on the SSA TPD benefits list with the people who had outstanding student loans. Those people are now being informed that they will be receiving relief that they could have qualified for many years ago in some cases, but they kept receiving the bills because they had no way of knowing that their debt should have already been canceled. In other words, this isn’t “new student debt relief.” It’s relief that the borrowers should have gotten ages ago, but the government was too inept to inform them. And the rest of you who don’t meet the above criteria are still not having a dime of your debt canceled. But this is at least some great news for people laboring under permanent disabilities who had no idea their burdens could have been removed in the past, so it’s still a good thing, I suppose.