The Education Department announced on Monday that it would be canceling student loan debt for more than 40,000 borrowers who have total and permanent disabilities.
In a press release, the department said more than 41,000 people who had their student loan payments reinstated will get their previous disability discharges back and any payments made during the COVID-19 pandemic will be refunded back to them. Another 190,000 borrowers who are still in a 3-year disability discharge monitoring period will not be asked to submit documentation of their earnings.
"Borrowers with total and permanent disabilities should focus on their well-being, not put their health on the line to submit earnings information during the COVID-19 emergency," Education Secretary Miguel Cardona said in the release. "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."
The department noted in the release that policy dictates that people who receive discharges are required to send in earning documentation. If their income is found to exceed a certain limit than their loans will be reinstated.
However, the Education Department pointed to a 2016 report by the Government Accountability Office that found nearly all of those who had their disability discharges reinstated did not exceed a certain income but instead did not submit the requested documentation.
"As of today, the Department will not require borrowers who received a total and permanent disability discharge to submit earnings documentation for the duration of the COVID-19 emergency. This change will be made retroactive to March 13, 2020, the start of the COVID-19 national emergency," the release said.
"Additionally, the Department will reverse any reinstatement of loan repayment requirements that occurred during this period because the borrower did not submit earnings information," the department added. "Impacted borrowers will not be required to later submit documentation of their income for the period covered by the COVID-19 emergency. Borrowers will begin to see their loans return to a discharge status in the coming weeks, including through follow-up communications from their servicer."