WASHINGTON (Reuters) - The U.S. government announced plans on Tuesday to forgive $7.7 billion in student loans for about 387,000 permanently disabled borrowers.
While permanently disabled Americans are already permitted student loan forgiveness under the Higher Education Act, many who are eligible have not taken advantage of the debt relief, the U.S. Department of Education said in a statement.
Of the 387,000 borrowers identified by the department as eligible but have not taken part in the program, about 179,000 of them are in default, potentially causing them to lose their federal tax refunds and Social Security benefits, the government said.
“Too many eligible borrowers were falling through the cracks, unaware they were eligible for relief,” U.S. Education Under Secretary Ted Mitchell said in a statement. “We need to make it easier, not harder, for them to receive the benefits they are due.”
The Education Department has partnered with the Social Security Administration to identify these borrowers.
Beginning on Friday, borrowers who were identified in the first round will receive a letter explaining their eligibility for loan forgiveness and what steps they need to take to receive a discharge.
The letters will be distributed over a four-month period. A follow-up letter will then be sent 120 days after the first letter if the department does not receive a signed application.
Reporting by Clarece Polke; Editing by Chizu Nomiyama