Feds May Forgive Loans of Up to 387,000 Disabled Borrowers

The Obama administration announced Tuesday that it had identified 387,000 federal student loan borrowers who qualify for loan forgiveness on the grounds that they are permanently disabled but who haven’t applied for it.

The Education Department said that it would be sending customized letters to those borrowers, who collectively owe nearly $7.8 billion in student loans, about their eligibility for a “total and permanent disability” loan discharge. About 179,000 of those borrowers are currently in default, and the government is prepared to garnish the Social Security benefits of more than 100,000 of them.

Federal law allows borrowers to seek loan forgiveness when they become totally and permanently disabled. But borrowers have to apply for that discharge.

The Education Department identified the disabled borrowers by checking which borrowers had already been deemed permanently disabled by the Social Security Administration, a designation that qualifies them for loan forgiveness. In the future, the department said it plans to cross-check the names of federal student loan borrowers with the Social Security Administration’s disability records each quarter.