New Legislation for the Disabled

The Obama Administration announced this month that it will forgive the student debt owed by almost 400,000 permanently disabled borrowers. The amount totals almost $7.7 billion.

Programs like this have been in existence for a while, and a major difference with this one is that the Department for Education is going to actively write to those it thinks are eligible for the debt forgiveness. The Department is going to use Social Security data to identify borrowers and send them a ‘simple’ application to sign and return, thus forgiving their federal student debt.

A crucial part of this reform has been to simplify the process through which borrowers prove they are fully disabled. Previously this has been an onerous process that consistently failed a proportion of disabled people; more information on how to prove disability has been published here: https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/disability-discharge#show-disability

Undoubtedly, this is welcome news for anyone who is disabled and burdened with student loan debt, and the Department should be commended for their effort to streamline the process for vulnerable people.

At the Claim Lab we are currently pondering what, if any, impact this will have on the insurance industry? Clearly not all of those who are eligible for the debt forgiveness program will have workers compensation insurance, but could there be any wider ramifications of the reform?

Specifically, we are considering how the program will impact the payments issued by insurance companies.

If it alters the levels of a claimant’s income will companies need to reassess payments? The Department of Education has said the letters will alert people to the potential impact this could have on their taxes, but it didn’t mention the impact this could have on any benefits or insurance pay-outs they receive.

More often than not there are unforeseen outcomes to reforms such as these, and we are keen to hear from insurance companies that have started to look at the potential impact this policy reform could have. If you or your legal teams have done any research into this, please do get in contact, we are interested to hear about it.

Please email us at: info@claimlab.org