Reed, Isakson Offer Bipartisan Plan to Automatically Erase Student Loans for Severely Disabled Veterans
WASHINGTON, DC – With deep gratitude for the sacrifices made by disabled servicemembers, U.S. Senators Jack Reed (D-RI) and Johnny Isakson (R-GA) have introduced S. 2049, a bill that would require the U.S. Department of Education to automatically discharge student loans for veterans who are totally and permanently disabled and employ new tactics to ensure that disabled servicemembers get the assistance they deserve.
Under current federal law, veterans who are “totally and permanently” disabled are entitled to have their student loans canceled. However, as currently administered, many veterans who qualify for this student loan relief are not receiving it. Many disabled veterans may not even be aware they are eligible to have their loans discharged.
“Veterans who have become disabled during their service to our nation should have their student loans forgiven without delay and without cumbersome red tape,” said Senator Reed, the Ranking Member of the Senate Armed Services Committee. “Our bill will require the Department of Education to automatically discharge student loans for eligible individuals and help to ensure that no veteran falls through the cracks due to a clerical error. I’m pleased at the support we’ve received from numerous veterans organizations and I urge our colleagues to join us in pressing for swift passage of this bill to provide this overdue assistance for the courageous servicemembers who have sacrificed so much for our nation.”
“This is a commonsense way to make it easier for totally and permanently disabled veterans to receive the student loan relief they deserve, and I hope that we’re able to act quickly on it,” said Senator Isakson, a member of the committee that oversees federal education matters and chairman of the Senate Committee on Veterans’ Affairs.
Last fall, the Department of Education and the Department of Veterans Affairs (VA) announced a data-matching program under which the VA would disclose data to the Department of Education concerning veterans who were determined to be 100 percent disabled or individually unemployable. The Department of Education then planned to alert eligible veterans with federal student loans of the opportunity to apply for debt relief.
Despite these initial efforts, the Department of Education reported this spring that of the over 40,000 veterans who were identified as eligible for loan forgiveness through the matching program, fewer than half submitted the required paperwork and, as a result, have not had their loans forgiven. Many of these individuals are still currently in default on their loans, which has had dire financial repercussions for them and their families. The legislation would automatically discharge the loans for eligible veteran student loan borrowers identified through the matching program in a manner consistent with current law. Previously, concern about potential tax liability was identified as a reason for not moving forward on automatic discharge of these loans. However, the Tax Cuts and Jobs Act of 2017 removed the federal tax liability, and we should now move forward without delay to automatically forgive these loans.
The new legislation from Reed and Isakson would require the Departments to conduct, at least twice per year, a computer matching program of individuals with student loans who have received a rating of total disability or who have been determined to be unemployable. It would also require the Departments to work together to address minor discrepancies in the data to ensure that no veteran falls through the cracks due to a clerical error. Finally, it would require the Department of Education to automatically discharge student loans for individuals identified as eligible through the matching program, unless the borrower opts out because the Department has identified a potential state tax liability.
The legislation has won the support of numerous veterans organizations, including Iraq and Afghanistan Veterans of America, High Ground Advocacy, Student Veterans of America, the Retired Enlisted Association, Veterans Education Success, and the U.S. Army Warrant Officers Association.
Companion legislation is being introduced in the U.S. House of Representatives by Congressman Conor Lamb (D-PA).
The complete text of the bill can be found here.