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NAAG Letter To Sec. DeVos
NAAG Letter To Sec. DeVos
RE: Student Loan Discharges for Totally and Permanently Disabled Veterans
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. “If a student
borrower...dies or becomes permanently and totally disabled...the Secretary
shall discharge the borrower’s liability on the loan by repaying the amount
owed on the loan.” 20 U.S.C. § 1087(a)(1) (emphasis added). When a veteran
1850 M Street, NW
“has been determined by the Secretary of Veterans Affairs to be unemployable
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Washington, DC 20036 due to a service-connected condition,” he or she “shall be considered
Phone: (202) 326-6000 permanently and totally disabled for the purpose of discharging such
http://www.naag.org/ borrower’s loans” and “shall not be required to present additional
documentation” of his or her disability. Id. § 1087(a)(2).
The Department of Education has identified over 42,000 veterans who are eligible for total and
permanent disability (TPD) discharges based on information that the Department has received
from the Department of Veterans Affairs.1 Collectively, these veterans carry over $1 billion in
dischargeable student loan debt—nearly $24,000 each on average. Yet fewer than 9,000 of these
eligible veterans had applied for TPD discharges as of April 2018, and over 25,000 were in
default. Although we hope that the number of eligible veterans requesting TPD discharges has
increased significantly in the interim, these initial numbers tend to confirm that the current
approach is inadequate.
As Attorneys General, we understand the difficulties faced by our residents who struggle to
manage their student loan debt. Those difficulties are only compounded for veterans and others
who are suffering from a total and permanent disability. The cost of education for our disabled
veterans today is soaring, and it would be of great benefit to those who are burdened by these
crushing debts to obtain relief without arduous compliance requirements.
Our collective experience working to protect veterans and other constituents from consumer
abuses related to higher education and student loans informs our request that the Department of
Education develop a process for automatically discharging student loans for veterans identified
by the Department of Veterans Affairs as 100 percent permanently disabled or individually
unemployable. This approach would eliminate unnecessary paperwork burdens and ensure that
all eligible disabled veterans can receive a discharge. And while the Department develops this
process, it should halt collection efforts against disabled veterans and clear their credit reports of
negative reporting related to their student loans.
Although the Department of Education has raised concerns about borrowers’ potential tax
liability, federal tax law now excludes loan discharges for disabled borrowers from taxable
income, and most states’ tax codes do likewise. Moreover, we think it likely that most borrowers
would prefer to have one hundred percent of their outstanding loans discharged, even if this
resulted in an increase to their state tax bill. However, in order to protect those borrowers and
respect each borrower’s right to make the choice that best fits his or her individual
circumstances, the Department could notify borrowers eligible for automatic discharges of the
potential state income tax consequences and allow them to opt out of having their loans
automatically discharged or request to have their loans reinstated.
There is no statutory or legal requirement that the Department of Education demand that eligible
veterans affirmatively apply for TPD discharges before the Department will forgive their loans.
See 20 U.S.C. § 1087(a)(1)-(2). To the contrary, the Higher Education Act makes clear that the
Department’s primary obligation is to provide relief to eligible individuals. The Department has
the authority to automatically discharge the student loans of disabled veterans, and we urge the
Department to implement the plain intent of the Higher Education Act by doing so as
expeditiously as possible.
1
Annie Nova, Many Disabled Veterans Eligible for Student Loan Forgiveness Are Still Paying, CNBC (Nov. 12,
2018), https://www.cnbc.com/2018/11/12/many-disabled-veterans-are-still-forced-to-repay-their-student-debt.html.
Proposals for automatic discharges with opt-out rights already have bipartisan support in
Congress and among leading veterans’ advocacy organizations.2 We now urge the Department
to take action to better protect those who once protected the nation. Our veterans deserve
nothing less.
Sincerely,
2
Letter to Secretary DeVos, Secretary Shulkin, and Acting Commissioner Berryhill from Senators Coons, Portman,
King, Collins, Duckworth, and Gardner and Representatives Kind and Roskam, (Feb. 15, 2018),
https://www.king.senate.gov/imo/media/doc/02-28-17%20DOEd%20SSA%20VA%20Letter.pdf; Letter to Secretary
DeVos from Senators Reed, Murray, Whitehouse, Warren, Klobuchar, Blumenthal, Van Hollen, Markey, Leahy,
Gillibrand, Shaheen, Duckworth, Hassan, and Feinstein (Nov. 9, 2018),
https://www.regulations.gov/document?D=ED-2018-FSA-0065-0003; Letter to Secretary DeVos from Ivy League
Veterans Council, Higher Ground Advocacy, The Retired Enlisted Association, Veterans Education Success, and
Vietnam Veterans of America (Nov. 9, 2018), https://www.regulations.gov/document?D=ED-2018-FSA-0065-0005.
Leevin Taitano Camacho Clare E. Connors
Guam Attorney General Hawaii Attorney General
Bridgett Hill
Wyoming Attorney General