Drew Lehman of Lansdale, Pa., became unable to work after a traumatic car accident. He is currently navigating the confusing, bureaucratic process of getting his federal student loans discharged.

Drew Lehman of Lansdale, Pa., became unable to work after a traumatic car accident. He is currently navigating the confusing, bureaucratic process of getting his federal student loans discharged. / Natalie Piserchio for NPR

The U.S. Department of Education says it will erase the federal student loan debts of tens of thousands of borrowers who can no longer work because they have significant disabilities. It's a small but important step toward improving a shambolic, bureaucratic process for hundreds of thousands of vulnerable borrowers who are legally entitled to debt relief, but haven't received it.

The announcement comes more than a year after an NPR investigation found just 28% of eligible borrowers had their loans erased, or were on track to, through the "Total and Permanent Disability Discharge" program. The U.S. Government Accountability Office and a bipartisan group of lawmakers had previously decried the program's ineffectiveness.

According to the department, more than 41,000 borrowers who have permanent disabilities will have roughly $1.3 billion in student debts conditionally discharged. These borrowers have already had their loans erased once before, only to have the debts restored during the pandemic after they failed to submit required income-monitoring paperwork correctly.

The department also announced that, for the duration of the pandemic, it will not require borrowers currently in income-monitoring to submit annual paperwork. Borrowers whose loans have been discharged due to Monday's announcement will still have to complete this monitoring process.

"Waiving these requirements will ensure no borrower who is totally and permanently disabled risks having to repay their loans simply because they could not submit paperwork," said Education Secretary Miguel Cardona.

The announcement is good news for borrowers whose disabilities prevent them from working to pay down their debts. But several borrower advocates reacted with frustration.

"Today's announcement is not cause for celebration but rather for outrage," Persis Yu, director of the Student Loan Borrower Assistance Project at the National Consumer Law Center, said in a statement. "It is scandalous that the Department revoked the loan discharges for 41,000 borrowers with total and permanent disabilities due to paperwork issues during a pandemic. While we are glad that the Department has rectified this injustice, we should not cheer for the Department re-cancelling loans that should have never been reinstated."

If you're confused, so are thousands of borrowers. Let us explain:

For over half a century, federal law has promised student debt relief to borrowers who can no longer work to support themselves because of a severe, permanent disability. But, in December 2019, an NPR review of federal data revealed that just 28% of eligible borrowers — identified between March 2016 and September 2019 — were getting the relief they're entitled to.

Even worse: Of the 365,000 potentially eligible borrowers who had not gotten relief by June 2019, more than half — 225,000 — had defaulted on their loans, an Education Department official told NPR at the time.

Why are so many incredibly vulnerable borrowers not receiving the debt relief they're legally entitled to?

First, relief isn't automatic. Borrowers have to ask for it. Advocates say the government's reliance on borrowers to respond to a notice of eligibility — rather than providing debt relief automatically — allows many borrowers to slip through the cracks.

"A lot of folks have disabilities that, frankly, prevent them from going through the process," Persis Yu told NPR in 2019. For example, a borrower with memory loss, or a borrower who may require long hospital stays, may struggle to keep up with paperwork.

What's more, NPR found in 2019 that tens of thousands of borrowers who did ask for help and had their loans conditionally discharged — later had their debts reinstated. That's because borrowers also have to submit annual paperwork, for three years, documenting their income. This was added to limit the potential for fraud, but the process has been poorly managed and can be fundamentally confusing for borrowers who are not working or earning income.

So confusing, in fact, that NPR found of the 200,000 borrowers who began the income-monitoring period between March 2016 and September 2019, 75,000 later failed out of the program and had their debts reinstated, most because they simply failed to submit this income paperwork.

"The irony is that you have to work really hard to prove that you're unable to work," Yu said.

In 2016, the Government Accountability Office reviewed the loan discharge process and found this income-monitoring period to be a significant obstacle for borrowers.

"It begins this sort of bureaucratic circle where you first apply, then you get kicked out, then you come back in through appeal, and it's understandably frustrating," Allison Bawden, who led that GAO review, told NPR in 2019.

Borrower Drew Lehman has had a taste of that frustration.

"They wouldn't tell me what I need to do to fix it. They just kept sending [my income paperwork] back, saying there was something wrong with it," says Lehman, who was approved to have his loans discharged in 2019. But he says in 2020 he repeatedly had his income monitoring paperwork rejected. "It wasn't until almost three months into this process that someone said, 'This is what we need you to say.' And it was something simple," Lehman recalls.

Lehman is married with two children and took out loans to pay for multiple degrees, including a doctorate in computer science, but he was badly injured after being rear-ended in a car accident. After multiple surgeries to address trauma in his back, Lehman realized that, because of the pain, he could no longer work enough to pay back his student loan debts.

While Lehman's income paperwork was finally accepted in 2020, he still worries about his old loans being unfairly reinstated.

"I feel like it's the sword of Damocles hanging over my head," Lehman says. Make one mistake "and everything comes back with a vengeance — because now you have all the loans plus the interest that's been building up over that time."

The change the department announced Monday is meant to take some of that pressure off of borrowers who are currently navigating the income-monitoring period, like Lehman. For the duration of the pandemic, he will not have to submit further income-related paperwork.

More importantly, the more than 41,000 borrowers who have had their loans reinstated since the start of the COVID-19 national emergency, on March 13, 2020 — because they failed to turn in the correct income paperwork — will have their debts erased all over again.

Borrower advocates say they hope this move by the department is just a first step in a broader effort to make sure the nation's most vulnerable borrowers get the relief they're entitled to — by doing away with the income-monitoring period entirely and making debt relief automatic.

"Let's be clear: today's announcement is not a victory for students," Alex Elson, senior counsel and cofounder of Student Defense, said in a statement. His organization has encouraged the department to make the loan discharge process easier. Hundreds of thousands of borrowers with severe disabilities are eligible for relief, Elson said. "The Department of Education knows exactly who they are but is choosing to do nothing for them."

On a Monday phone call with reporters, a senior Education Department official acknowledged that the Total and Permanent Disability program "is not working as efficiently as it should" and left open the possibility of further reform, saying "we are continuing to look at what else we can do here."

According to the latest Education Department data, as of December 2020, 349,000 borrowers with severe, permanent disabilities were identified by the Social Security Administration as eligible to have their loans discharged. More than half — 196,000 — have federal loans in default.

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