Disability discharge? Who knew?

As Money magazine’s MarketWatch reported today (emphasis added):

The Department of Education will send letters to 387,000 people they’ve identified as being eligible for a total and permanent disability discharge, a designation that allows federal student loan borrowers who can't work because of a disability to have their loans forgiven. The borrowers identified by the department won’t have to go through the typical application process for receiving a disability discharge, which requires sending in documented proof of their disability. Instead, the borrower will simply have to sign and return the completed application enclosed in the letter. If every borrower identified by the department decides to have his or her debt forgiven, the government will end up discharging more than $7.7 billion in debt, according to the department.

How did this come to pass? Well, someone had a bright idea:

The government identified eligible borrowers by matching Department of Education data on student loan borrowers with Social Security Administration data to determine which federal student loan borrowers are receiving disability benefits and whose conditions aren't expected to improve.

However, another point in the article jumped out at me, namely this:

Often borrowers losing out on these benefits aren’t even aware that they’re eligible for a disability discharge, said Persis Yu, the director of the Student Loan Borrower Assistance Project at the National Consumer Law Center.

So, if you (or someone you know) is suffering from a permanent disability and has student loan debt, let them know about this program; even if they aren’t among those identified by the Administration, they can still apply for a disability discharge of their student loan debt.

(IMPORTANT NOTE: Under current tax law, forgiven student loan debt may be considered as taxable income; that stinks, but paying taxes on X thousand dollars in debt is still a tremendous improvement over seeing one’s wages or tax refunds garnished to PAY X thousand dollars, eh?)

Kudos to the Administration for delivering a boost to some of those most in need of it.