Education Department fails to discharge disabled student loan borrowers
People with recently-acquired disabilities have been swimming through an endless sea of red tape to get the U.S. Department of Education to forgive their student loans. And in a joint investigation, ProPublica and the Center for Public Integrity uncovered evidence that the department has been repeatedly rejecting applications for those who qualify under federal law to have their loans forgiven, even after the requests have been approved by individual lenders and the Social Security Administration. The investigation found that between 2007 and 2009, the department received 174,718 discharge applications; 45,000 were rejected or remained unsolved.
Federal law dictates that the education department forgive borrowers of their loan obligations if they develop severe and lasting disabilities after they took out federal student loans. The law is intended to spare disabled borrowers –- some of whom cannot and never will be able to work, and thus never be able to pay off their debt.
But currently, the process is tedious: Borrowers have to fill out endless forms and obtain medical records their doctors, and there is no written medical standard for determining a disability, and no formal appeals process for denial.
An internal report, first published in the Propublica/CPI investigation, uncovered internal documents from the federal student-aid ombudsman to the Education Department excoriating the department’s review process and recommending it be contract the decisions out to the other government agencies to determine disability.
The irony is that the department does contract out its loan-discharge decisions –- to private companies, who are also hired to manage other programs. And that’s part of the problem -– when decisions get back to the federal department, they often don’t make it back to the borrower who is still waiting for a response and meanwhile racking up interest on top of their piling debt. The ProPublica/CPI investigation pointed out cases of borrowers applying and reapplying to have their loans discharged for five years or longer and having to pay with their dismal Social Security checks.
Federal reforms have been made to ease the process for people who become disabled: In 2008, Congress passed a law that relaxed the discharge standard from terminal and indefinite to five full years and made it easier for veterans to be discharged immediately. Two years later, the Education Department implemented these changes, among others to improve communication with borrowers.
Reforms are nice, if they are actually practiced. But if the government can’t control its own departments, who can?