Education Department Relaxes Rules on Loan Relief for Students with Disabilities

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The US Education Department is rescinding student loans for the majority of Americans who have awarded loan forgiveness due to disabilities. According to the agency’s announcement, their debt was reinstated since they could not procure the necessary paperwork.

This move intends to form a loan forgiveness program meant for individuals with disabilities but unfortunately had too many rules. Once awarded by loan forgiveness, creditors are asked to prepare paperwork of their income for three years. If the figures go more than the thresholds or unable to complete the documentation, their debts will be reinstated.

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After recognizing the complexity of the program’s procedures, the Education Department mentioned that it would ease up the policies during the pandemic and mull over the amendments to the required paperwork moving forward.

Until the pandemic officially ends, many borrowers currently in the three-year monitoring term will not be asked to provide proof of income. According to the agency, those who had their loan reinstated due to documentation issues will be granted loan forgiveness.

This initiative was formed to financially help individuals who are permanently disabled and incapable of generating sufficient income.

Borrowers are qualified if they can procure the paperwork that supports their disabilities as permanent or last for a minimum of five years. While they’re in the monitoring phase, their earnings should meet the poverty level stipulated in their state.

A few years ago, the program was under investigation following a report about the complicated income reporting policies since these caused complications for the borrowers. The US Government Accountability Office discovered a significant number of loan reinstatement cases were because borrowers failed to submit the proper documentation and not due to having higher income.

Read the complete report from the WTOP News.