Vets are Still Defaulting on Student Loans Despite TPD Program

Student Loan Consolidation

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President Trump signed a new student loan forgiveness law earlier in the year. This new law allowed for almost 42,000 disabled veterans to get their student loans completely wiped clean. This is a much-needed reprieve for disabled veterans who cannot work nor afford to pay back their debt. The problem is, there’s just not enough information out there just yet.

So far, only 18% of the 42,000 eligible veterans have made a claim to have their student loans forgiven. That’s not even the worst part. Nearly half of them, around 25,000 disabled vets, have defaulted on their student due to nonpayment. That makes it more likely that these service workers simply do not know about the program.

The program is called Total and Permanent Disability Discharge, or TPD for short. It allows for veterans who have been disabled permanently due to service-related injuries to get their student loans forgiven. If they’ve already been paying on those student loans previously, they can have that money refunded back to them.

Veterans can also have student loans they take out for their children forgiven as well. The only qualification is that the individual has to be classified 100% disabled. The disability must be the result of service-related work. This program can be a lifesaver for these vets. It’s shameful that the Department of Education hasn’t done a better job of promoting it.

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The VA and Student Loans

Despite the total lack of education regarding this program, veterans know it’s available. Both the Department of Education and the Department of Veterans Affairs have worked together to make it work. Their data sharing initiative has allowed the crosschecking of the VA and education department databases.

If there’s a match, showing a disabled veteran with student loans, they are mailed an application for TPD. Still, of the 42,000 veterans contacted, only 7,700 were actually forgiven. Despite the vets receiving the application, there’s still a clear miscommunication about what TPD actually does.

“These people can’t work. They’re 100 percent unable to work. Of course, they’re going to have problems paying back student loans,” said Mike Saunders, director of the military and consumer policy at the nonprofit Veterans Education Success. “It’s up to the administration to take proactive action to go out and help these people. To that end, we believe that automatic forgiveness should be something that the administration should be considering.”

Veterans service organizations, like the Vietnam Veterans of America, have petitioned Betsy DeVos to make the TPD more accessible for disabled veterans. They’ll think it’s fair for a vet to have to fill out an application. In a letter to the education secretary, the VVA wrote:

“It is not fair to ask severely disabled veterans to have to complete paperwork, especially given that some catastrophic disabilities will interfere with their ability to complete the paperwork.”

Unwanted Consequences

The administration feels that they’ve done enough to let veterans know about this new program. This is despite the veteran’s groups asking for a more streamlined and automatic process. It’s still unclear why so many veterans have not gone through the program yet.

“The Department recognizes the sacrifices veterans and their families have made for our country, which is why we’ve streamlined the TPD discharge process through the data matching process with the VA,” Liz Hill, a spokeswoman for the Education Department, said in an email.

“The last thing we want to do is cause unintended consequences — like impact future federal student aid or create a state or local tax liability — for men and women who have given so much.”

Currently, the Department of Education uses Nelnet to notify veterans that they qualify. Nelnet is a federal loan servicer. Once they approve the data, Nelnet sends the veteran an application and gives them 120 days to respond. From that moment, they no longer have to make payments on the student loans.

But, once the 120-day period is up, the government will continue collection loans once more. This is why the VVA and other groups are begging for an automatic process. The veteran shouldn’t have to fill out an application if they’re 100% disabled. The process should be completely automatic.

The Department of Education must help more than they do. Instead, they make the process more difficult. Education is the key. Help get the word out about these programs.


Last modified: January 14, 2019