Department of Education

Federal Disability Benefits and Student Loan Discharge

What's needed? - Consistent definitions of disabling conditions for purposes of federal benefits payments and student loan discharge.

 

Why? - Several federal agencies, most notably Social Security Administration and Department of Veterans Affairs, determine eligibility for federal disability benefits. The agencies' definitions and processes for establishing disability differ for purposes of paying federal benefits. Having consistency in the medical determinations and processes could save money and provide predictability across all federal agencies finding an individual eligible for disability payments.

 

How does the disability definition relate to student loans? - Consistent definitions of the medical conditions qualifying an individual for federal disability payments could impact managing or discharging federal student loan payments. An individual applying for or receiving federal disability benefits may also have federal student loans. If the disability is “permanent and total” the loans may be discharged; however, legislation authorizing student loan discharge does not define “permanent and total” completely. If all federal agencies agreed on a definition of “total and permanent,” the loan discharge process would be more transparent and results more predictable, thus saving anxiety, confusion and delay for individuals already dealing with the difficulties of a disability.

Individuals without a “total and permanent” condition as defined by all federal agencies could then be counseled on the best way to manage their student loan obligations through income-indexed repayment or comparable alternatives. Administrative costs would be reduced because fewer applicants would have to submit multiple requests subject to an inconsistent medical definition. Agencies could also save by notifying benefits applicants of the process for student loan management at time of application so that "one stop does it all" approach could determine disability benefits and loan options through appropriate cross-agency partnerships. The emphasis would be to coordinate all potential federal interfaces for the impacted individuals’ current situation, rather than operating in a singular-role environment that places burden on the person needing government assistance.

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Idea No. 17918