One of the rare circumstances where student loans can be discharged is total disability. (Some of the others are death, a school’s loss of accreditation, and in bankruptcy, proof of “undue hardship.”) At least, that’s how it’s supposed to work.
ProPublica, together with the Center for Public Integrity, reports that many disabled student borrowers face a Kafka-esque bureaucracy in efforts to discharge their student loans. Things are even so bad that, after being declared fully disabled and unable to work by the Social Security Administration, borrowers are having their discharge claims rejected by the Department of Education. Even worse–the companies that service student loans are garnishing the wages of Social Security disability payments.
The most outrageous part of the story, buried at the bottom of the article, concerns borrower Scott Creighton. ProPublica reports:
Scott Creighton, a former carpenter and draftsman living in Tampa, Fla., was declared disabled by Social Security in September 2009. Three years before, he had suffered a pulmonary embolism — a blood clot traveled from his leg to block the main artery of his lung — that left him unable to work a full day or repay his federal student loans.
“The claimant has the following severe impairments: deep vein thrombosis, chronic obstructive pulmonary disease, and depression,” ruled Social Security Judge Christopher Messina. “Considering the claimant’s age, education, work experience, and residual functional capacity, there are no jobs that exist in significant numbers in the national economy that the claimant can perform.”
The Education Department is still collecting on Creighton’s student loans. Soon after the judge’s decision, Creighton began receiving calls from Enterprise Recovery Systems, a debt collector acting on behalf of the department. On the advice of a customer service agent, he requested a disability discharge of his debt and sent Enterprise his medical records and the Social Security judge’s decision.
In November 2009, Creighton received a rejection letter from Enterprise. It said he had failed to prove that his condition had not existed when he took out his loans, even though he obtained the last of his federal loans in 1993, more than a decade before the embolism.
What a wonderful world we live in. Not only is the Department of Education duplicating the efforts of the Social Security Administration, but they are doing so with no good reason to do otherwise.
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