Biden cancels another $1.3 billion in student loan debt

The Biden administration announced Monday that it let tens of thousands of people with disabilities off the hook for their student loans at a cost to the taxpayers of $1.3 billion.

Whittling away at the nation’s $1.7 trillion in student debt, the agency will forgive loans to more than 41,000 people with chronic disabilities that prevent them from working, according to the Education Department.

“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 move comes just two weeks after the agency canceled another $1 billion in loans for those who had been defrauded by for-profit colleges.

But even the latest move — canceling the loans of people who are disabled and unable to work — is unlikely to satisfy progressives who demand President Biden to cancel as much as $1 trillion in federal student loans. Democrats including Senate Majority Leader Charles E. Schumer of New York and Sen. Elizabeth Warren of Massachusetts have pushed the Biden administration to knock off $50,000 of debt from every student loan.

One advocacy group pushing for the more widespread cancellation of student debt, Student Defense, blasted the debt rollback Monday for not going far enough.

“Let’s be clear: Today’s announcement is not a victory for students,” said Student Defense senior counsel and co-founder Alex Elson.

Student Defense, which was founded by former top Education Department attorneys in the Obama administration, said the move ignores another 400,000 people with disabilities who hold about $14 billion in student debt. 

The department requires those declared disabled by the Social Security Administration to separately apply for their debt to be canceled with the Education Department. About 70% of those eligible do not apply because they are unable to or do not know about the option.

Still, the move was hailed by Rep. Bobby Scott, Virginia Democrat and chairman of the House Education and Labor Committee.

“Borrowers with disabilities and their families should not suffer extreme and lasting economic harm for failing to submit paperwork during a global health emergency,” he said.

The department already forgives the debt of those with disabilities that prevent them from working for at least five years. But the federal government requires people who are disabled to fill out paperwork for three years verifying their income or be held responsible for their loans again.

In many cases, people do not properly fill out the paperwork. A 2016 General Accounting Office report found that in 98% of the cases in which people with disabilities had their student loan obligations reinstated, it was because they hadn’t submitted paperwork.

The Education Department said it is canceling $1.3 billion in student loans for those who had the cancellation of their student loans undone because of paperwork reasons. Another 190,000 people with disabilities also will not have to repay their student loans because the education department will no longer require them to submit the paperwork about how much they owe.

Persis Yu, director of the National Consumer Law Center’s Student Loan Borrower Assistance project, also called on the Education Department to go further and cancel billions more in loans for the additional 400,000 people with disabilities.

“This announcement demonstrates the depths of the broken student loan system. We urge the department to take bold steps towards systemic reform. At a minimum, the department should provide automatic relief to the 400,000 borrowers known to qualify for a disability discharge,” she said.