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Total and Permanent Disability Discharge of Loans Under Title IV of the Higher Education Act rule (2020)

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The Total and Permanent Disability Discharge of Loans Under Title IV of the Higher Education Act rule is a significant rule issued by the U.S. Department of Education effective July 1, 2020, that amended department regulations regarding student loan discharge for totally and permanently disabled veterans under the Higher Education Act.[1]

HIGHLIGHTS
  • Name: Total and Permanent Disability Discharge of Loans Under Title IV of the Higher Education Act
  • Code of Federal Regulations: 34 CFR Parts 674, 682, and 685
  • Agency: Office of Postsecondary Education, Department of Education
  • Type of significant rule: Economically significant rule

    • Timeline

    The following timeline details key rulemaking activity:

    • July 1, 2022: The final rule took effect.[1]
    • August 23, 2021: The Department of Education, under the Biden administration, published a final rule adopting the interim regulations as final.[1]
    • July 1, 2020: The interim final rule took effect.[2]
    • January 27, 2020: The Department of Education closed the comment period.[2]
    • November 26, 2019: The Department of Education published an interim final rule and opened the comment period.[2]
    • August 21, 2019: President Donald Trump (R) issued a presidential memorandum to direct the Secretary of Education to discharge student loans for totally and permanently disabled veterans.[3]

    Background

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    President Lyndon Johnson (D) signed the Higher Education Act (HEA) into law on November 8, 1965, in an effort to strengthen educational resources and financial assistance for college students by increasing federal grants to universities, creating low-interest student loans, and issuing scholarships. Title IV of the HEA established standards for offering financial assistance to college students, which governed the Student Assistance General Provisions.[4]

    President Donald Trump (R) issued a presidential memorandum on August 21, 2019 titled, "Discharging the Federal Student Loan Debt of Totally and Permanently Disabled Veterans," which directed the Secretary of Education to discharge student loans for totally and permanently disabled veterans. In response to the memorandum, the Department of Education issued interim final regulations to remove barriers to totally and permanently disabled veterans from receiving discharges of their student loans.[3][2]

    Summary of the rule

    The following is a summary of the rule from the rule's entry in the Federal Register:

    “ The Department of Education (Department) issues these interim final regulations to amend and update the regulations for total and permanent disability student loan discharge for veterans by removing administrative burdens that may have prevented at least 20,000 totally and permanently disabled veterans from obtaining discharges of their student loans, as the law provides. These barriers create significant and unnecessary hardship for these veterans. Removing these barriers is a matter of pressing national concern. Although the Department construes its interim final rulemaking power narrowly, under these circumstances the Department finds good cause to implement the rule immediately.[2][5] ”

    Summary of provisions

    The following is a summary of the provisions from the rule's entry in the Federal Register:[2]

    “ Under 34 CFR 674.61(c)(2)(x), 682.402(c)(9)(xiii), and 685.213(c)(1)(v), the Secretary will consider a borrower for whom data is obtained from the Department of Veterans Affairs showing that the borrower is “totally and permanently disabled” to be eligible for discharge and will not require additional documentation to discharge the borrower's loans.


    Reasons: The Secretary is amending the regulations for the Federal Direct Loan Program, the Federal Family Education Loan Program, and the Federal Perkins Loan Program to remove administrative barriers for veterans who are entitled to student loan discharge due to a service-related total and permanent disability.

    Due to concerns that unnecessary bureaucratic burdens prevented eligible veterans from obtaining loan discharges guaranteed by law, in 2018 the Departments of Education and Veterans Affairs entered into a data sharing agreement to enable the Department of Education to identify eligible totally and permanently disabled veterans. Approximately 50,000 eligible veterans were identified as the result of this agreement. However, due to a burdensome administrative process, more than 20,000 eligible veterans have failed to receive relief.

    Consequently, to help veterans receive the relief to which they are entitled, the Secretary is amending the regulations to eliminate the need for a separate application from each borrower. Instead, the Secretary will consider a borrower to be eligible for a loan discharge when the Secretary has received information from the Department of Veterans Affairs showing that the borrower has a total and permanent disability. After determining that this information demonstrates the borrower meets statutory criteria and is eligible for a loan discharge, the Secretary will notify the borrower that his or her loan is being discharged. The borrower may reject the discharge within the number of days specified in the notification. In that case, the borrower will be liable for the full amount of the principal and interest on the loan, as well as any other fees and costs that may be legally assessed.[5]

    		”

    Significant impact

    See also: Significant regulatory action

    The Office of Management and Budget (OMB) deemed this rule economically significant pursuant to Executive Order 12866. An agency rule can be deemed a significant rule if it has had or might have a large impact on the economy, environment, public health, or state or local governments. The term was defined by E.O. 12866, which was issued in 1993 by President Bill Clinton.[1]

    Text of the rule

    The full text of the rule is available below:[1]

    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 Federal Register, "Total and Permanent Disability Discharge of Loans Under Title IV of the Higher Education Act," August 23, 2021
    2. ↑ 2.0 2.1 2.2 2.3 2.4 2.5 Federal Register, "Total and Permanent Disability Discharge of Loans Under Title IV of the Higher Education Act," November 26, 2019
    3. ↑ 3.0 3.1 Federal Register, "Discharging the Federal Student Loan Debt of Totally and Permanently Disabled Veterans," August 26, 2019
    4. ↑ Federal Student Aid, "Gainful Employment Information," accessed May 2, 2023
    5. ↑ 5.0 5.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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