Military Related

How Disabled Does a Patriot Have to Be to Have Student Loans Forgiven?

Written by Steve Rhode

Recently President Trump directed the Department of Education to wipe out the federal student loan debt for 25,000 completely disabled veterans, who appear to be the group already in default. He received a lot of praise for this effort.

One headline read “Trump’s debt forgiveness for disabled veterans is ‘our duty as Americans.”

But You Have to Wonder

The same totally disabled veterans who had their federal student loans forgiven were already eligible for loan forgiveness but had failed to jump through the hoops to apply for it. And there are a number of reasons why that could happen. And many of those veterans have already defaulted on their payments anyway.

Trump’s announcement does not change the underlying process to make totally disabled veterans automatically eligible for federal student loan forgiveness.

How Disabled do You Have to Be to Be a Patriot?

I regularly get questions from veterans who are disabled, like this one from George, “I have student loan debt, totaling 74k, consisting of subsidized and unsubsidized Stafford loans. I am a veteran with a 90% disability rating from the VA and served in both Iraq and Afghanistan (March 2007-June 2008 & April 2009-November 2009). I was honorably discharged and went to school after leaving the military.”

The new Trump announcement would not cover George. He’s 10 percent not disabled enough to have his loans forgiven.

So it appears to be an all or nothing situation. Either you were “lucky” enough to be totally disabled or you get no loan forgiveness under being partially disabled.

Ironically the best advice for George, and others is to go back, again and again, to work the system to get labeled as 100 percent disabled and then fight to have only your federal student loans “fingers crossed” forgiven.

And What About the Private Student Loans?

The Trump executive order is praised as honoring our veterans but what you will notice if you look a little closer is it does not apply to eliminate private student loan debt for the same group of disabled veterans.

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These are service members who were part of the aggressively targeted marketing efforts by for-profit schools who burdened them excessively with private student loans.

So as the new executive order stands, we honor our totally disabled veterans for their service by eliminating part of their student loans that a significant number were unable to pay anyway.

And let’s not forget, this effort to have the student loans removed is not a new idea. In fact, in a May 2019 letter, the National Association of Attorneys General urged, “the Department of Education to take prompt action to satisfy its statutory mandate to discharge the student loans of veterans who are permanently and totally disabled or otherwise unemployable. As a nation, we have a moral obligation to assist those who have put their lives on the line to defend us.”

But this is a law on the books since 2008, “Under the Higher Education Opportunity Act of 2008, which passed Congress with strong bipartisan support before being signed by President Bush, the Department has an obligation to discharge the loans of veterans who are permanently and totally disabled as result of their service.”

And this praised effort by Trump does not automatically eliminate the student loans. It is a directive for the Education Department and the Department of Veterans Affairs to simplify the process to speed up applications.

But at the end of the day, it took an executive order signed by the President to get the Department of Education to do its job.

And let’s not forget about all the veterans who served and believed they could have their federal student loans forgiven under the Public Service Loan Forgiveness program, only to run into rejections, denials, and more hurdles from the Department of Education. Or how about only being 75 percent disabled and trapped into a perpetual Income-Driven Repayment program that may never have the debt federal student loan debt forgiven.




About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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