Bill Would Erase Student Loans for 100% Disabled Veterans

Jason Hogue

5 years ago

UPDATE 9/31/2023: This bill was introduced in the 116th Congress and was passed by the House in March 2020, but was never passed by the Senate and did not proceed to the President’s desk for signature. It never became law.

Student debt has been in the news a lot recently and a new bill has been proposed to automatically erase student loan debt for veterans who are “totally and permanently” disabled.

US senators, Jack Reed (D-RI,) and Johnny Isakson (R-GA,) have introduced S.2049, a bill that would amend the Higher Education Act of 1965.

Erase Student Loan Debt for Disabled Veterans Automatically

This bill was introduced on June 28, 2019, and is in the first stage of the legislation process. The bill now needs to be considered by committee before it can be sent on to the House or Senate as a whole.

What is the current law?

Under current law, veterans who are “totally and permanently” disabled are entitled to have their student loan debt canceled, however many do not even know about this benefit or take the steps to receive it.

In 2018, the Department of Education and the Department of Veterans Affairs (VA) announced a data matching program where the VA would disclose data to the Department of Education concerning veterans who are 100% disabled or who are unemployable. The Department of Education planned to alert these veterans that there is an opportunity to apply for debt relief.

Problems are awareness and red tape

The problem is, the Department of Education reported that 40,000 veterans had been identified as eligible for loan forgiveness through the matching program. However, fewer than half have submitted the required paperwork and haven’t had their loans forgiven.

Some disabled veterans defaulting on student loans as a result

Many veterans were even in default of their student loans. This is a big issue because defaulting on your student loans isn’t good for your financial future, and can lead to other problems. This is especially troubling since there is a way to have the loans erased.

What will this new bill do?

This bill will help fix this issue by making it so those who identify as qualifying for the debt relief will have their loans automatically discharged.

With this legislation, the departments will need to conduct a computer matching program of those veterans with student loans and with a total disability rating or who are unemployable, at least twice a year.

Next, the departments will need to work together to address any minor discrepancies to make sure that no veterans will fall through the cracks because of a clerical error. The borrower should also be able to opt-out if the department has identified a potential state tax liability, which could be an issue.

Senators’ comments on the new bill

Senator Reed, the Ranking Member of the Senate Armed Services Committee, has said that, “Veterans who have become disabled during their service to our nation should have their student loans forgiven without delay and without cumbersome red tape. Our bill will require the Department of Education to automatically discharge student loans for eligible individuals and help to ensure that no veteran falls through the cracks due to a clerical error. I’m pleased at the support we’ve received from numerous veterans organizations and I urge our colleagues to join us in pressing for swift passage of this bill to provide this overdue assistance for the courageous service members who have sacrificed so much for our nation.”

In addition, Senator Isakson, a member of the committee that oversees federal education matters and chairman of the Senate Committee on Veterans’ Affairs has said, “This is a commonsense way to make it easier for totally and permanently disabled veterans to receive the student loan relief they deserve, and I hope that we’re able to act quickly on it,”

This bill has the support of numerous veterans organizations and would be a great way to support disabled veterans and help them out financially.