After more than a year of urging by Democrats and Attorneys General from over 51 states and territories[1] (including Ohio Attorney General David Yost)[2], and more than a month after the introduction of a bi-partisan bill called the Federally Requiring Earned Education-Debt Discharges for Veterans Act, 100% disabled veterans will have their federal student loans fully discharged.[3] Due to the combined efforts, on August 21, 2019, President Trump issued an Executive Memorandum directing the Secretaries of Education and Veteran Affairs to create a more streamlined process for Totally and Permanently Disabled Veterans to obtain forgiveness of their student loans.[4]
Veterans who are totally and permanently disabled had already been entitled to discharge of their federal student loan debt, under the Higher Education Act. The current administration, however, felt that process was “overly complicated and difficult,” and found that to date only about half of all eligible veterans have availed themselves of the benefit[5] and more than half of eligible veterans had already defaulted on their federal loans.[6]
In 2018, the Departments of Education and Veteran’s Affairs had unveiled a “data matching process” to more efficiently identify and notify eligible veterans of the forgiveness benefit. The data matching process combined with the recent presidential directive to increase efficiency has resulted in a revamped procedure that automatically confers the benefit, unless the eligible veteran specifically declines the benefit. Why might disabled veterans decide to decline this valuable benefit? Veterans may, (within 60 days of notice of eligibility), elect to decline loan relief either because of potential tax liability in some states, or because receiving loan relief could make it more difficult to take future student loans.[7]
While the expedited process was only recently unveiled, the Department of Education announced that since April 2018, it had already discharged more $650 million dollars in Federal student loans owed by more than 22,000 eligible veterans[8], which equals out to approximately $29,545.45 per eligible veteran. While not specifically addressed in the presidential memorandum, defaulted federal loans may be included in the discharge, as well as both loan forgiveness and loans that disabled veterans take out for their children’s education.[9] Dischargeable federal student loans includes: Federal Family Education Loans (FFEL), Direct subsidized and unsubsidized loans and Perkins loans.
[1] LeBlanc, Paul (CNN). 51 attorneys general urge Betsy DeVos to forgive disabled veterans’ student loan debt, (updated May 25, 2019) https://www.cnn.com/2019/05/25/politics/student-loans-disabled-veterans-attorney-generals-betsy-devos/index.html
[2] National Association of Attorneys General letter to Secretary DeVos, (May 24, 2019) https://attorneygeneral.utah.gov/wp-content/uploads/2019/05/NAAG-Letter-to-Sec.-DeVos.pdf
[3] Shane III, Leo. (Military Times) Disabled Vets Could See Their Student Loan Debts Automatically Erased, (July 1, 2019.) https://www.militarytimes.com/news/pentagon-congress/2019/07/01/disabled-vets-could-see-their-student-loan-debts-automatically-erased/
[4] Presidential Memorandum on Discharging the Federal Student Loan Debt of Totally and Permanently Disabled Veterans, President Donald Trump, August 21, 2019. https://www.whitehouse.gov/presidential-actions/presidential-memorandum-discharging-federal-student-loan-debt-totally-permanently-disabled-veterans/
[5] Presidential Memorandum on Discharging the Federal Student Loan Debt of Totally and Permanently Disabled Veterans, President Donald Trump, August 21, 2019.
[6] Shane III, Leo. (Military Times) Disabled Vets Could See Their Student Loan Debts Automatically Erased, (July 1, 2019.) https://www.militarytimes.com/news/pentagon-congress/2019/07/01/disabled-vets-could-see-their-student-loan-debts-automatically-erased/
[7] U.S. Department of Education. Trump Administration to Automatically Forgive Federal Student Loan Debt for Totally and Permanently Disabled Veterans, (August 21, 2019) https://www.ed.gov/news/press-releases/trump-administration-automatically-forgive-federal-student-loan-debt-totally-and-permanently-disabled-veterans
[8] U.S. Dept. of Education and Kreighbaum, Andrew. Faster Loan Forgiveness for Disabled Veterans, (August 22, 2019). https://www.insidehighered.com/news/2019/08/22/trump-administration-grant-disabled-veterans-automatic-loan-forgiveness
[9] Shane III, Leo. (Military Times) Disabled Vets Could See Their Student Loan Debts Automatically Erased, (July 1, 2019.)