The Office of the Inspector General (OIG) for Social Security issued a report November 9, 2020 indicating Social Security needs to improve its efforts to identify individuals the agency has found totally and permanently disabled (TPD) who may be eligible to have their student loans discharged. Social Security is supposed to identify these beneficiaries and inform the Education Department (ED) so these beneficiaries can have their loans discharged. Below are the findings of the report and recommendations as issued by the OIG.
Findings
SSA needs to improve its data-matching process to assist ED in administering the TPD discharge process for disability beneficiaries with student loan debt. We estimate data matches SSA completed during our review period did not identify 36,248 borrowers with MINE status. This occurred because SSA had incorrect coding in its Disability Control File or had converted the beneficiaries from disability to retirement benefits. As a result, SSA did not identify these beneficiaries to ED as eligible for loan discharge.
Recommendation
We recommend SSA identify all current disability beneficiaries with incorrect medical diary reason codes in the Disability Control File and take appropriate action to update/correct the errors so the matching process identifies all borrowers with MINE status. SSA agreed with our recommendation.
Background On Getting Loans Discharged
Individuals with TPD are eligible to have their Federal loan debt discharged. To assist ED in fulfilling its obligation to ensure borrowers with disabilities who have Federal student loans more efficiently and effectively apply for TPD discharge of their student loans, SSA and ED entered into a computer-matching agreement. ED accepts SSA’s MINE designation as evidence of TPD and uses SSA match responses to identify and inform borrowers with TPD of their eligibility for student loan discharge.
In 2016, SSA’s initial match under the agreement identified approximately 400,000 borrowers with TPD. SSA reported these matches to ED. Since that time, SSA and ED have conducted similar quarterly data matches.
Taking Matters Into Your Own Hands
If you have been found disabled by the Social Security Administration and you have outstanding student loans you should notify your student loan servicer. It is probably not a good idea to wait for Social Security to inform the Education Department on your behalf. As this report shows the Education Department may never be notified. You should contact your loan servicer and inform you have been found disabled by Social Security and ask about what documents you need to get your loan discharged. Most of the time the servicer will want to see the decision letter indicating you have been found disabled and the award letter indicating you have been awarded benefits. Other applications and steps may need to be taken, but further information about getting student loans discharged due to a disability can be obtained by contacting the Education Department. It is also important to know that student loans may not be discharged if you have an impairment that is expected to improve within a few years, but more guidance can be provided by the loan servicer.
