Education Department Bureaucracy Keeps Disabled Borrowers in Debt

Posted on Feb 14, 2011

By Sasha Chavkin, Cezary Podkul, Jeannette Neumann and Ben Protess

This article is a collaboration among ProPublica and the Center for Public Integrity, which are independent nonprofit investigative newsrooms; and the Stabile Center for Investigative Journalism, at Columbia University.

It was co-published with the Chronicle of Higher Education.

Tina Brooks can't sit or stand for more than half an hour before the pain in her lower back becomes intolerable. She suffers severe headaches and memory loss, and she has lost most of the vision in her left eye. Five doctors and a judge from the Social Security Administration have all determined that she is fully disabled and unable to work.

A former police officer and mother of two, Brooks fractured a vertebra in her back, damaged three others in her neck, and suffered a concussion when she fell 15 feet down a steep rock quarry while training for bicycle patrol. But even though Social Security approved her disability claim, she has been mired for more than five years in an unsuccessful struggle to persuade the Department of Education to accept that she is too disabled to work again—and to forgive the $43,000 that she borrowed in federal student loans.

"I'm a cop, and I know how to fill out paperwork," Brooks says. "But when you're trying to comply with people and they're not telling you the rules, I might as well beat my head on the wall."

Under federal law, borrowers who develop severe and lasting disabilities after taking out federal student loans are entitled to have their debts forgiven. The system was meant to be compassionate: to spare former students who become disabled from a lifetime of ruined credit, garnished benefits, and spiraling debt. But an investigation by ProPublica and the Center for Public Integrity has found that the process of discharging the loans of disabled borrowers is broken.

These borrowers, whose ailments often make it hard for them to navigate a complex bureaucracy, confront a byzantine system that has resulted in many applicants' being rejected for unclear reasons, and has led many others to simply give up. Despite demands for improvement from Congress, the courts, and its own internal watchdog, the Education Department has repeatedly failed to heed basic recommendations for fixing the process.

An unpublished internal report by the federal student-aid ombudsman in 2009, obtained through a public-records request, urged the Education Department to resolve "fundamental deficiencies in the disability discharge process. It proposed changes to address the problems of "no written medical standards for determining disability," "no formal appeals process" for denials, and "undue burden and costs" on borrowers, who must obtain required medical forms from their doctors at their own time and expense. The ombudsman has twice recommended that the department consider scrapping its review altogether—and instead contract the decisions out to the Social Security Administration or other agencies with "mature and proven processes" for evaluating disability.

None of these recommendations has been followed.

The department has been more responsive to reforms ordered by Congress and the courts, but applicants have seen little change. Congress passed a law in 2008 creating an expedited loan-discharge process for veterans and easing the standard for discharge, from a full disability that is either indefinite or terminal to, instead, five years of full disability. In 2009 a federal court in Missouri found that the program's communication with borrowers was so poor that it was unconstitutional, violating applicants' due-process rights.

In 2010 the department put into effect changes including the facilitated process for veterans and the relaxed discharge standard ordered by Congress, along with a new online system for handling submissions that allows borrowers to check their application status on the Web. It also provides more informative correspondence and a more detailed application form for borrowers, steps proposed by the ombudsman and an internal department task force.

"We know that there have been problems and shortcomings with the system and the process for some time," says a department spokesman, Justin Hamilton. "We have been working to remedy those, including the development and implementation of a new system to better serve the needs of this community."

But advocates who work with student borrowers say they have yet to see those reforms reflected in the experiences of their clients.

"They've made some improvements now, to their credit, but I think the actual, on-the-ground practice of getting information to borrowers is still the same," says Deanne Loonin, an attorney with the National Consumer Law Center and director of its Student Loan Borrower Assistance Program. "We're still seeing the same kind of problems we've seen for a long time."

Rejections Untallied

It is unclear how many borrowers seeking loan discharges are needlessly turned away, mostly because the department has released only limited data on the program. The statistics it provided show that from 2007 to 2009, the department received 174,718 such applications. About 45,000 were rejected or remained unresolved, but the data did not distinguish between the two.

The department did not provide reasons for its denials, or track how many borrowers were rejected during other stages of the lengthy assessment process.

For instance, borrowers are often rejected during an initial review by private lenders and nonprofit guarantors that are subsidized by the government. Those rejections are neither monitored nor subject to appeal within the department, despite recommendations by the ombudsman to either make the reviews more accountable or eliminate them altogether.

New and Improved Comments

If you have trouble leaving a comment, review this help page. Still having problems? Let us know. If you find yourself moderated, take a moment to review our comment policy.