Impact: Education Department will forgive $5.8 billion in student loans for disabled borrowers

Scott Creighton, a struggling borrower profiled in my 2011 story about student loan disability discharge. Photo: Brian Blanco for ProPublica.

Under federal law, borrowers who develop severe and lasting disabilities after taking out federal student loans are entitled to have their debts forgiven. But as my Columbia Journalism School investigative reporting classmates and I discovered in a 2011 investigation, the Department of Education’s process for forgiving disabled borrowers’ debts was so broken that it lacked standards for determining disability, didn’t explain to borrowers why their applications had been denied and provided no formal appeals process for denials. The result was a lifetime of ruined credit, garnisheed benefits, and spiraling debt instead of the compassionate loan forgiveness that borrowers had been promised.

As I’ve written previously, our story made a big impact on disabled borrowers’ lives by documenting the extent of these problems and putting into motion a series of fixes to the program in 2012 and 2016. But even so, problems persisted. As I reported for Business Insider, progress remained slow. As of Nov. 2019, the department had sent out some 571,000 offer letters to borrowers who had qualified for disability discharge. But only around 218,000 had been approved for discharge, leaving more than 350,000 still waiting to successfully navigate the process.

Now, real help may finally be on the way. In August 2021, the Department of Education announced a key reform that will hopefully speed up the approval process once and for all. As Sasha Chavkin, one my colleagues who helped me break the story, explained in a post for ProPublica, the department will now automatically forgive the debt of borrowers who the Social Security Administration has identified as severely disabled. That way, a simple data match will help establish the borrowers’ disability status. And the department will move to eliminate a three-year monitoring period after loan discharges that led many borrowers with disabilities to have their debts reinstated due to difficulties with paperwork. The department estimated the total amount of these automatic loan discharges at $5.8 billion.

It’s amazing to see that more than a decade after our reporting, the story is still spurring positive change. But why did it take so long? ProPublica Editor-In-Chief Stephen Engelberg explored that question in a column. Steve rightly pointed out that it’s hard to predict which stories will spur impact and which ones won’t and how long it might take. Why did it take ten years in this case? The Social Security data match for identifying disabled borrowers was a no-brainer solution, but it took a long time (and a lot of unnecessary suffering) before it was politically beneficial to the people with the power to impose change. President Biden has faced political pressure to cancel at least some part of federal student loan borrowers’ debts, and this was a move that wouldn’t marshal much opposition.

Better late than never. But as with previous iterations of fixes to this and other Department of Education loan forgiveness programs, it will be crucial to keep up watchdog reporting and ensure that the reform works as intended and that other borrowers don’t fall through the cracks. Scott Creighton, a former carpenter who we interviewed in our 2011 story (pictured in the photo accompanying this post) still had not had his loan forgiven when Sasha checked in with him in 2021. Creighton suffers from chronic obstructive pulmonary disease, which has made it impossible for him to go back to work. Even under the new rules, Creighton won’t get an automatic discharge of his loan, so the struggle will continue for many borrowers.

But the story is a good example of how reporting can make a positive impact – even if, like me and Sasha when we worked on this piece in 2010-2011 – you’re a journalism school student starting out your career.