More than half of the veterans with disabilities whom the U.S. Education Department has identified as eligible to have their student loans canceled are already in default on their debt, according to new federal data, Politico reported.
Earlier this year, the Departments of Education and Veterans Affairs announced a joint effort to notify student veterans of their eligibility for discharge of their federal student loan debt because of permanent disability. The agencies identified more than 42,000 veterans who collectively owe more than $1 billion in federal student loans but are entitled to a discharge of that debt based on their "total and permanent disability," according to data released in response to a Freedom of Information Act request from veterans' organizations. However, of those veterans, well over half—25,023 borrowers—had defaulted on their student loans as of mid-April, reported Inside Higher Ed.
Six veterans' groups, including Veterans Education Success and Vietnam Veterans of America, sent a letter to Education Secretary Betsy DeVos on Friday urging the department to automatically provide the loan discharges. "It is not fair to ask severely disabled veterans to have to complete paperwork, especially given that some catastrophic disabilities will interfere with their ability to complete the paperwork," the groups wrote.
The Republican tax law passed last year removed any federal tax liability for permanent disability discharge. However, the Education Department reiterated in its response to the FOIA request that it was still concerned about state tax liabilities that would arise from automatic loan discharge.
Inside Higher Ed