The U.S. Education Department said this week that it would overhaul its troubled program for forgiving the federal student loans of disabled borrowers. An investigation published last week in The Chronicle found that the bureaucratic program had kept many disabled applicants in debt.
“This system must work better for borrowers that become totally and permanently disabled,” said Justin Hamilton, a spokesman for the department. “We’ve put in place a number of major changes to address many of the problems borrowers encountered, and will be making even more changes when we issue proposed regulations in the coming months.”
The investigation, by reporters at the nonprofit newsrooms ProPublica and the Center for Public Integrity, found that although borrowers who develop severe and lasting disabilities are legally entitled to get federal student loans forgiven, the process for deciding who is eligible is dysfunctional, is opaque, and duplicates similar reviews conducted by other federal agencies. Many bids for loan forgiveness have been denied for unclear reasons, and many borrowers have simply given up.
The Education Department said it would quickly take a number of steps to be more responsive to applicants and would also consider fundamental changes. In particular, it is weighing whether to accept the disability determinations that the Social Security Administration and other federal agencies have made.
The department also said it was studying whether to bypass its bureaucratic program altogether, and instead rely on Social Security or another agency to review all applications. Those reforms have repeatedly been recommended to the department by its own ombudsman since 2008, but it has so far declined to act.
The department has long promised to improve the system, pledging to cooperate more closely with Social Security and other disability programs. But this time, it said, it would write new regulations to deal with the disability loan-discharge program, the first time in a decade it would do so without being directed to by Congress.
Officials in the department said they believed it had the authority to make the necessary changes and did not require Congress to pass new legislation, removing an obstacle that they have cited in the past as preventing them from adopting the reforms.
Still, it’s an open question how far the department will go, or exactly when the changes will take hold. It said it was still examining its options and would release proposed rules this summer. After that, it would very likely be a year before the rules were set and went into effect.
Wasteful and Duplicative
The pledges of reform came as key lawmakers in both parties called for changes in the current system.
“The current process is neither transparent nor efficient,” said Sen. Al Franken, a Minnesota Democrat who sits on the Senate’s education committee. “It’s unconscionable that some people have been turned down for loan forgiveness not because they don’t qualify, but because of simple paperwork errors that could be easily addressed.”
In the House of Representatives, the chairwoman of the education committee’s subcommittee on higher education demanded improvements in the program.
Rep. Virginia Foxx, Republican of North Carolina, criticized the Education Department’s disability review as duplicative. “This looks like a classic example of government waste and bureaucratic inefficiency that not only wastes taxpayers’ money, but also their time,” she said. “The higher-education subcommittee will be taking a closer look at this problem to determine a solution that will save taxpayer time and money.”
Rep. Rubén E. Hinojosa of Texas, the subcommittee’s top Democrat, said he was concerned about the plight of disabled borrowers seeking loan forgiveness. “Our government should take all actions possible,” he said, “to make this process more streamlined for those who are suffering through these hardships.”
The Education Department said that while many of the problems would be dealt with by the proposed rules, other fixes could be quickly put in place.
It pledged to review the procedures for disability-related loan discharge within the next 90 days to identify areas of “undue burden” to applicants, and would act immediately to change practices that could be amended without new laws or regulations.
It also said it would make it easier for borrowers to document that they are experiencing economic hardship, a finding that would prevent the department from garnishing disability benefits to pay down student-loan debt.
In steps that are expected to take more time, the department also said it would begin direct data sharing with other federal agencies to reduce the documentation burden on applicants, and would create a customer-service group within the department to assist disabled borrowers with the loan-discharge process.
It also plans to streamline the process so borrowers have to submit only a single application to the Education Department, rather than having to apply to lenders and guarantors that hold government-backed loans before being considered by the department.
This article was produced by ProPublica, an independent nonprofit investigative newsroom.