President Obama’s Federal Student Loan Forgiveness Program

If you are disabled and unable to pay your outstanding student loans help is now available.

Author Attorney Greg Reed:
It is very difficult for even successful people to repay their student loan debt. An individual who is unable to work and living on Social Security payments typically cannot afford to pay back their loan. Since 2013 loan relief help was available but difficult to seek out.

Individuals who are unable to work and living on Social Security payments typically cannot afford to pay back student loans. Since 2013 help has been available.

Student loans are a part of life for 40 million Americans.

4 million Americans have not been able to make payments on those loans in the past 90 days, and many more are struggling. Individuals with student loan debt are less likely to take economic risks such as starting a business or furthering their education. The problem is only growing as a college education becomes more essential. In 2015, the average senior graduated $35,000 in debt.

A more educated workforce is needed to keep up with the progression of technology.

Manufacturing jobs that were once open to the uneducated are now being performed by robots. Low-skilled, entry-level positions that once gave workers a foot in the door and chance to “learn the ropes” are increasingly being filled by machines. According to a study by Georgetown University, since 1989, those with only a high school diploma or less have seen a 14% drop in employment opportunities while those with a bachelor’s degree or higher have seen an 82% gain. It’s estimated 65% of jobs in the next four years will require at least some college education. For most students graduating high school, college is the responsible choice that will offer them the best career opportunities. Unfortunately, those opportunities come with a price as tuition (and subsequent student debt) is projected to continue to skyrocket.

Forgiveness of student loan debt had been available for the permanently disabled since 2013.

However, the Social Security Administration did not publicize this effectively and most Americans with disabilities were left unaware of the program. President Obama decided, beginning April 2016, the US Department of Education should actively seek out those who are eligible for student loan debt forgiveness and relieve them of their debt burden. The new program will affect 387,000 disabled debtors, nearly half of which are already in default. 100,000 of those who will receive loan forgiveness were at risk of having their benefits and tax returns garnished to pay their loans. In total, the program will forgive over $7.7 billion in debt, an average of nearly $20,000 per borrower.

Letters with instructions on how to apply for student loan forgiveness were sent to Individuals with permanent disabilities on April 18th, 2016.

This new policy is clearly a relief for those it affects.

It is difficult for even the most successful people to repay student loan debt. An individual who is unable to work and subsisting on Social Security payments simply cannot afford to pay back their loan. Before the new program, help was available but difficult to seek out. Disabled borrowers often found themselves in default because they were physically unable to meet their obligations. In one extreme instance, a borrower in a vegetative state was placed in default for failing to provide income verification. Under the new policy, the Social Security Administration will work with the Department of Education to identify permanently disabled borrowers and discharge their loans.

Letters with instructions on how to apply for student loan forgiveness were sent to Individuals with permanent disabilities on April 18th, 2016.

If you are disabled and have student loan debt, but have not received your letter, the application is available online. If your application is approved, all loan payments received after the debtor’s disability date will be returned and the loans will be discharged, but subject to a three year monitoring period. The monitoring period requires that the borrower remain disabled and not take out new student loans. At the end of three years, if all conditions have been met, the loan will then be forgiven. It is important to keep in mind that debt forgiveness counts as income and is subject to tax. Your tax burden for the loans will be for the year they are discharged- prior to the monitoring period.