Targeted loan relief programs don’t work (opinion)


Red tape and bureaucratic barriers prevent millions of student borrowers from accessing essential help. There is no clearer example than the federal government’s student loan relief program for people with disabilities.

Since its creation in 1965, the Total and Permanent Discharge (TPD) The program promised to erase federal student loan debt for people whose disabilities limit their ability to work. However, as with many targeted relief programs similar to those floated as a solution to the student debt crisis, many eligible borrowers never completed the application process to receive this relief. As negotiators in recent rulemaking sessions negotiated by the U.S. Department of Education, we heard firsthand from many borrowers who have struggled to navigate the bureaucratic hoops involved in these forgiveness programs.

The premise of the original TPD program was quite simple: anyone with a permanent disability that significantly limits their ability to work will receive federal student loan forgiveness if they request it. In practice, however, applying for TPD cancellation was an almost insurmountable process, requiring borrowers to identify themselves and then navigate a long, complicated and paper-heavy system – the very kind of process which prevented eligible borrowers from obtaining employment in the first place.

Even the help with the app didn’t make the program much more accessible. Under the Obama administration, the Department of Education and the Social Security Administration created a data matching program so that the Department of Education could easily reach people receiving disability benefits. After locating the hundreds of thousands of people who could benefit from this program, the Department of Education mailed them applications to complete in order to access debt relief. Only 36 percent of these borrowers with disabilities were able to find and compile the information needed to properly complete the application and obtain debt relief through this program.

Even after obtaining debt relief, the TPD also required borrowers to declare their income at various times during a three-year monitoring period – even though the Ministry of Education could easily access this data – a requirement that has enabled tens of thousands of borrowers to have their loans. reinstated because they had not completed the necessary documents. A 2016 Government Accountability Office report revealed that 98% of those whose loans were reinstated were reinstated because they failed to submit the annual income verification form.

Noting this administrative failure, in the fall of 2021, the Ministry of Education announced an automatic discharge to borrowers who have been identified as eligible through the Social Security Administration and who have reformed its policies so that, in the future, the department no longer requires documentation from borrowers known to be eligible for the ‘cancelation.

This was a necessary step after years of preventing disabled borrowers from receiving the debt relief to which they are entitled. And it was a huge success, with over 400,000 borrowers disabled ultimately receiving the cancellation. It turns out that the best – and obviously the only – way to ensure that borrowers actually receive relief is to cut out unnecessary red tape. We should not go down a path today that repeats the mistakes of TPD.

And although PDT has been corrected, these problems will continue to affect people with disabilities. TPD eligibility standards are extremely high, based on the Social Security Disability Standard, which is one of the strictest in the world. Millions of people with disabilities and other at-risk populations, such as those living in poverty and those with language barriers, will have to rely on the new cancellation program that President Joe Biden is now considering. This includes the elderly who are still repaying their own loans or their children’s loans long after retirement and direct care workers who have been on the frontlines of the pandemic serving people with disabilities and the elderly.

The TPD program is a cautionary tale for targeted relief programs. As the President considers student debt forgiveness, he should remember TPD and other examples of failed forgiveness programs and choose a policy implemented through automatic relief. Cumbersome processes only guarantee one thing: those who need it most are left behind.


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