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Financial Services Law Insights and Observations


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  • Education Dept. announces new TPD discharge measures for student borrowers

    Federal Issues

    On August 19, the U.S. Department of Education announced that more than 323,000 student loan borrowers who have a total and permanent disability (TPD) will receive automatic discharges totaling over $5.8 billion. Under the final regulations, applicable borrowers will be identified through an existing data match with the Social Security Administration starting with the September quarterly match to allow “the Department to provide automatic TPD discharges for borrowers who are identified through administrative data matching by removing the requirement for these borrowers to fill out an application before receiving relief.” Borrowers matched with the Department of Veterans Affairs have already been able to take advantage of the TPD discharge data match since 2019. Two additional TPD-related policy items were also announced: (i) the Department will indefinitely extend a previously announced policy to stop asking borrowers to provide earnings information beyond the end of the national emergency (“a process that results in the reinstatement of loans if and when borrowers do not respond”); and (ii) the Department will propose eliminating the currently required three-year income monitoring period during a negotiated rulemaking that will begin in October.

    Federal Issues Department of Education Student Lending Consumer Finance Agency Rule-Making & Guidance Discharge

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  • Department of Education streamlines borrower defense relief process

    Federal Issues

    On March 18, the Department of Education announced a new, streamlined approach for ensuring federal borrowers who attended institutions that engaged in certain misconduct are able to receive full discharges of their William D. Ford Direct Loan Program loans. The new approach—which rescinds a methodology announced in December 2019 that relied “on publicly available earnings data and a scientifically robust statistical methodology to determine harm”—will immediately create a path for borrowers with approved borrower defense claims to date to receive full loan discharges, including borrowers who already had their claims approved and received only partial relief. In addition, the Department said full relief under the new approach will also include requests to credit bureaus to remove any negative ratings tied to the loans, and reinstatement of a borrower’s federal student aid eligibility, where applicable.

    Federal Issues Department of Education Student Lending Discharge Borrower Defense

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