Education Department retreats from key change for student borrowers with disabilities

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The long-troubled U.S. Department of Education program for repaying student loans of former students who develop disabilities will not begin accepting disability determinations from other federal agencies, reversing a proposed change to the program that followed an extensive investigation into the program’s bureaucratic shortcomings in February by ProPublica and the Center for Public Integrity.

A photograph of Graduation cap on top of stacks of money

DOE Retreats from Pledge

The U.S. Department of Education, which is required by federal law to repay students who develop certain severe disabilities, began looking at overhauling it student loan forgiveness program in May.  When determining whether students have a disability extensive to the point they can no longer pay back their loans, the department conducts its own review, separate from those performed by the Social Security Administration and other agencies.

This “separate, arduous and largely duplicative review”process often leaves former students waiting years for their loans to be reimbursed, as documented in the investigation.

The DOE now will only look at streamlining the process for determining what constitutes a disability under its guidelines, but will not begin accepting other reviews. This represents an “about face” from what the department pledged in February, according to an ProPublica article from August 29.

“It seems like there will mostly be small incremental improvements with none of the major changes that are really necessary,” said Mark Kantrowitz, an author and consultant on student financial aid, in the article.

The program has long been scrutinized by internal reports. A 2009 report from the department’s ombudsman found that program has “fundamental deficiencies,” including no “written medical standards for determining disability,” “no formal appeals process” for denials. and “undue burden and costs” on borrowers.”

Also that year, the U.S. District Court for the Western District of Missouri found the program’s communication with borrowers was so poor that it violates their constitutionally protected due process rights.

The DOE argues that separate reviews are necessary because benefits through programs such as the Social Security Administration only require temporary disabilities, while a “total and permanent disability” is required to forgive a student loan.

However, a 2008 law passed by Congress said loans should be reimbursed for students with at least five years of being “unable to engage in any substantial gainful activity,” the same standard used for Social Security Disability Insurance benefit.