Journalism in the Public Interest

Education Department Backs Away From Fix to Help Disabled Student Borrowers

The Education Department had promised to fundamentally overhaul its broken system for forgiving the loans of former students who’ve become disabled. Now the department says it can’t and won’t do it, leaving many disabled applicants stuck in debt.



This story was co-published with the Chronicle of Higher Education.

After suffering from panic attacks and episodes of psychosis, Donita McDonald was diagnosed with a severe mental illness in 2009. She was unable to work or attend school, so the Social Security Administration declared the 21-year-old disabled. After the ruling, McDonald’s family turned to the Department of Education, appealing to also have her thousands of dollars in student loans forgiven. The department is supposed to forgive the loans of former students who develop severe and lasting disabilities, such as McDonald. 

But rather than accept the Social Security Administration’s ruling, the Education Department has forced McDonald to go through a separate, arduous and largely duplicative review that has left her facing continuous collection efforts, even though she is unable to handle her own finances. 

McDonald’s experience is far from unique. As ProPublica, The Chronicle of Higher Education and the Center for Public Integrity detailed in an article in February, the department’s dysfunctional process for evaluating disability is keeping many genuinely disabled applicants in debt. Internal reports by the department’s own ombudsman found that the program has suffered from “fundamental deficiencies” including “no written medical standards for determining disability,” “no formal appeals process” for denials and “undue burden and costs” on borrowers. 

Following the article, the government acknowledged the shortcomings and said it was considering making a fundamental fix that experts say would both cut spending and help borrowers in need. Instead of requiring all borrowers to go through the Education Department’s cumbersome, opaque and often redundant system, the agency could accept disability findings from Social Security and other federal agencies.  

But now nearly six months later, the department says it can’t and won’t do it. 

The Education Department said it was still making good on a pledge to write new regulations for the program and that the resulting reforms would be substantial. It said it was focused on streamlining its system, for example by eliminating the initial reviews by loan holders and guarantors that many borrowers must undergo.

The new rules should create “a process that will result in superior treatment for borrowers even when compared to the best practices of any other federal agency,” said David Bergeron, of the department’s Office of Postsecondary Education.

But experts say the department is shelving the most significant potential change—accepting Social Security decisions—before the process of writing the new rules even begins.

“It seems like there will mostly be small incremental improvements with none of the major changes that are really necessary,” said Mark Kantrowitz, an author and consultant on student financial aid.

No Way Forward?

Deanne Loonin, an attorney with the National Consumer Law Center and the director of its Student Loan Borrower Assistance program, estimated that fully two-thirds of her clients who apply for loan discharges to the Education Department already have Social Security determinations. Loonin said accepting those decisions “would be the most important change by far” for her clients.

Before February, the department had maintained that it could not accept disability findings by other agencies without new legislation by Congress. It had said that Social Security designations, which are for temporary disability benefits, are far different than the standard of “total and permanent disability” required for forgiving a student debt. 

Experts disputed that interpretation, saying legislation passed by Congress in 2008 opened the door for the Department of Education to accept certain Social Security rulings. And the department eventually appeared to agree, saying in February it believed it had the authority to write new rules that would allow it to accept disability findings by other agencies, as long as their standards paralleled its own.

It said a department working group was considering the “promising option” of accepting Social Security findings as part of the new rules it would write for the disability discharge program.

“This system must work better for borrowers that become totally and permanently disabled,” said Justin Hamilton, a spokesman for the Education Department.

Now the department says it simply cannot find a way to accept other agencies’ disability findings while obeying the guidelines set out by Congress. 

When asked what part of the statute constrained them, Bergeron, the department official, cited its requirement that borrowers must be unable to work because of “a medically determinable physical or mental impairment that can be expected to result in death.”

“We just can’t find a comparable determination that the Social Security Administration or other agencies are making to the one we’re making,” Bergeron said.

Yet the revisions by Congress from 2008 state that discharges should also be granted for disabilities expected to cause at least five years of being “unable to engage in any substantial gainful activity”—the same standard and time period that is used by Social Security to designate disabilities that aren’t expected to improve.

Kantrowitz, the student-aid expert, said that with the new standards established by Congress, the Education Department has the power to accept Social Security designations and should use it. “If an individual has one of those statuses, why not short-circuit the process since the two are equivalent?” he said.

The Education Department is still planning on writing new rules, a process that began with public meetings in May. The content of the rules will be hashed out in negotiating sessions between department officials and representatives of colleges, student-loan companies and borrower advocates.

Bergeron said the sessions will probably begin in October and last three or four months. He said the department was open to considering alternative approaches presented during the negotiations. 

But following the department’s recent about-face on the question of whether it can accept other agencies’ disability findings, experts are skeptical that the new regulations will substantially change the program. However significant the obstacles to accepting these determinations may be, experts say the reforms now on the table will not be able to fix the program’s principal shortcomings.

Loonin, the attorney for borrowers, said “it would just be procedural changes” if accepting Social Security designations is not considered at the negotiated rule-making. “We would be very disappointed,” she said. 

In Limbo

While the Education Department considers reforms, borrowers like Donita McDonald and her mother, Deborah, have still faced harassment from debt collectors, even as the family struggles to manage Donita’s disability. Two areas the department indicated in February that it planned to reform—its refusal to accept Social Security determinations, and problems with its process for proving financial hardship—have been sources of particular frustration for the McDonalds.

In the fall of 2006, Donita started her freshman year of college. But she soon began experiencing severe bouts of anxiety and visited the school’s mental health services. The panic attacks turned out to be early signs of a serious mental illness. In her sophomore year, she suffered a psychotic break and had to be hospitalized and withdraw from college.

In 2009, Social Security found that Donita was fully disabled and incapable of working. McDonald’s mother, Deborah, assumed power of attorney to handle Donita’s finances, which included paying off her daughter’s roughly $24,000 in student loans. In 2010 she applied to the Education Department to forgive her daughter’s loans on the grounds of her disability. Since the department does not accept Social Security’s findings, Donita had to undergo another medical review, and Deborah had to submit applications to each of Donita’s loan holders.

“I have to show over and over that she’s not capable, which is personally painful,” Deborah McDonald said.

Most of McDonald’s loans are under review, and the payments have been suspended. But McDonald has still had to deal with about $7,900 in government-backed Stafford loans. This May she started getting collection letters and daily phone calls about these loans from her loan servicer, Sallie Mae.

The most troubling incident for McDonald occurred in June, after she applied to Sallie Mae for forbearance due to economic hardship. Sallie Mae responded with a letter that said a “forbearance request form” was enclosed.

But the enclosed form was actually an automatic debit authorization form, which would have authorized Sallie Mae to deduct payments from Donita’s bank account. And instead of sending the form to Deborah McDonald, Sallie Mae sent it directly to Donita.

“Basically they bait and switched,” Deborah McDonald said. “My daughter’s not able to make that determination.”

“To me it’s almost illegal, it’s so misleading.”

When contacted by ProPublica about Ms. McDonald’s case, Sallie Mae’s director of customer advocacy, Amanda Holt, personally looked into the situation. McDonald’s discharge application was approved within two business days—ending the collections efforts by Sallie Mae—and sent on to the Education Department for a review. “This has been a unique and unfortunate case of miscommunication,” Holt said. 

McDonald is now in limbo until a final review by the government determines if her debt can be wiped off the books.  

The department declined to comment on the case of an individual borrower but said that the changes it is making with the new regulations are intended to fix these types of problems. 

Update (8/30): The afternoon after this story was published, the Department of Education contacted the McDonalds and said Donita's Stafford student loans have been forgiven. Her other federal loans are still awaiting a final review for discharge.

Donita's mother, Deborah McDonald, who has been navigating the Education Department's dysfunctional disability review since early 2010 in her efforts to get these loans forgiven, said she was relieved when she got the news in a phone call from the department. But she also described her frustration that the department was only now addressing the problem. "I feel like tears of joy and tears of rage," Deborah McDonald said. "If it was that easy, why the heck did I spend two years doing this?"

Doug Cochrane

Aug. 29, 2011, 8:15 a.m.

“It had said that Social Security designations, which are for temporary disability benefits, are far different than the standard of ‘total and permanent disability’ required for forgiving a student debt.”

This interpretation of the approval process for Social Security Disability benefits is completely incorrect. The two disability programs (SSDI and SSI) that are run by the Social Security Administration are both intended only for citizens who can prove that they are totally, permanently disabled. The criteria under which the SSA determines disability are very strict, and the application, appeal, and hearing process can take several years to complete.

In a time when entitlement reform and budgeting are raging topics in congress and the media, it seems that a small changes that could eliminate major government expense, such as instituting policies of reciprocity between organizations, could go a long way to save taxpayer dollars.

Thanks for the article,

Social Security Disability Help

Barry Schmittou

Aug. 29, 2011, 12:47 p.m.

Butchered chickens are treated better than disabled humans in the U.S. !!

Obama and Bush’s DOL/DOJ Directors took no action after reading quotes I submitted from numerous Federal Court Judges that prove insurance company Doctors’ ignore life threatening medical conditions including Brain lesions and Multiple Sclerosis, cardiac conditions of many disabled patients, and a foot that a new mother broke in 5 places.

Their treatment of Psychological claimants is so severe U.S. District Judge Richard Enslen wrote :

“Metlife and its henchmen should appreciate that such conduct may itself precipitate the suicide death of a person who has placed implicit trust in their organization. This record is an open indictment of MetLife’s practices and treatment of the mentally-ill and long-term disability benefits.”

While Obama leads prayers on TV his Directors also ignored proof that many injured workers kill their self !!

WFAA-TV in Dallas wrote :

“a remarkable number of Texans committed suicide because they could no longer endure the pain caused by their injuries and they had been repeatedly turned down for worker’s comp care. Some insurance companies send peer review doctors medical files “stripped” of records important to the possible approval of workers’ comp claims.”

Here are three Judges who prove Metlife endangered multiple patients with cardiac conditions who file claims on these policies !!

In the case of Wright verses Metlife U.S. Magistrate Judge Jennifer Guerm wrote these quotes :

“MetLife relied on clearly erroneous findings of fact in making its benefit determination. MetLife’s review of Plaintiff’s appeal consistently omitted or misrepresented relevant information in several ways. On October 18, 2004, Dr. Barnett wrote a letter to MetLife stating:

“I am gravely disturbed by your misrepresentation of the facts with regard to my discussion with your independent physician consultant and your lack of due diligence in collecting further medical information regarding Mr. Wright’s health condition. Indeed, Mr. Wright has ongoing cardiac disease including ischemia and loss of function due to previous myocardial infarctions.”

Judge William Acker asked Metlife this question about cardiac patient Frank Blankenship :

“Can a heart patient with angina, working under severe stress, be expected to earn up to 60 percent of what he earned before his heart condition, that is, until he drops dead?”

In his case ruling U.S. District Judge Malachy Mannion provided these internal document quotes from a company named Syncrony that conducted functional tests for MetLife in the claim of JAMES KNOBLAUCH:

“Unstable BP first day, said she had to call MD his pressure was so high. On the second day his heart rate was unstable and he was having abdominal pain, so limitations were more medical [than] strength factors…” (Doc. No. 20, p. 42)
(end of quotes)

So MetLife conducted two days of tests on a man who had an unstable heart rate and unstable BP during the tests !!!!!

The full case quotes linked later show quotes where Judge Mannion wrote that MetLife and Syncrony withheld this evidence when they denied Mr. Knoblauch’s claim !!

More disabled medical cases and links to full case quotes seen below !!

Obama received a $30,000 contribution from MetLife VP James Sullivan in October 2008 !

( Please wait to view official documents linked at )

On April 15th 2010 Mr. Sullivan signed MetLife’s third Non Prosecution Agreement for multiple frauds and rigging bids to increase sales of health related policies !!!

But MetLife is still destroying the lives of many claimants !!!!

Multiple Judges prove MetLife is also very fond of endangering Psychological claimants lives !!

Here are three important quotes from Judge Terrence McVerry in SCHWARZWAELDER verses Metlife :

“Her treating/evaluating physicians assessed the stressful nature of that position, deemed it causal to her mental health symptoms and diagnoses, and concluded that (a) Plaintiff was unable to continue to perform under the conditions of that occupation and (b) to attempt to do so would risk serious further consequences to her health.”

“The Court is also highly concerned by the Administrator’s rejection of evidence (a) MetLife had no basis for rejecting those observing-physicians’ conclusions”

(end of quotes)

Sgt. Barefoot

Aug. 29, 2011, 1:46 p.m.

No one can claim to be as intelligent as the Dept. of Education. They are so smart that they arbitrarily make up their own rules as they go along.

Epic is as epic does. When Congress declared “Jihad” on what their contemporary ledgers appeared as defaulted student loans,they threw out any contractual agreements of a statue of limitations and abruptly declared 25 year mandates. Placating leverage “debtors prisons” for all those caught up in the under tow of bureaucratic largess. Usurping laws that JFK signed into existence, how many of those Law maker elites completed their education on the system that they have denied future generations. Republicans and Democrats alike.

There are countless victims of their organisation whom become the subjects of anarchaic “usury” and extortion methods.

Of course!  Because, despite the fact that their salaries are dependent upon tax dollars, a high ranking govt official’s job is to make things more difficult for the average American…more stressing and arcane.  They need to justify their position by enacting more requirements and red tape. Just another sign of the “us vs them” mentality in govt.  Fire the lot and start over with high school grads looking for work.  Couldn’t possibly be worse.

How many of us were lured into Special Education by the promise of tuition reimbursement offered by the Department of Education only to now be left with debt that can’t be paid because we have received no raises?

I also want to give a public “THANK YOU!!!” to Mr. Sasha Chavkin for his research, contacts, dedication, writing, and sensitivity to our situation. Job well done!  Sincerely, Deb

The Department of Education really does jnot do a good job with loan forgiveness. My wife went into special education and we thought she could get forgivenes for teaching at a low income school for 7 years. But alas, we learned her first loan was in Aug 1998, and the rules require the first loan to be disbursed after Oct 1998. Today, she uses a wheelchair and breathing assistance due to a form of a muscular dystrophy that we recently learned about. We considered a student loan discharge, but she also has been able to secure part time work (that’s all she can do) helping people with disabilities, so maybe we won’t.

Jason Paskowitz

Aug. 29, 2011, 8:04 p.m.

No surprises here for any of us who have been involved in the student debt issue for any length of time.  The US Department of Education generally, and OPSE/FSA/DCS in particular, is a fetid sewer of corruption designed to enrich lenders, useless state guarantee agencies, collection agencies, and, yes, the stakeholders at ED itself. 

Given that ED collects 123% of every dollar of defaulted student loan debt, it should be apparent that there is every incentive in the world for loans to be thrown into default, and to be hunted down and collected mercilessly once in default. 

As the economy worsens, and as higher education continues to spiral out of control, this situation portends only to get worse for the $1 trillion student loan market.  As it is, only 1/3 of all student loans at any given time are being repaid as contracted.  The rest are either in forebearance/deferment (during which time interest upon interest accumulates), delinquency, or outright default.

Jason Paskowitz
New Jersey State Lead

From one of the links in the article to federal law:

(a) Repayment in full for death and disability
If a student borrower who has received a loan described in subparagraph (A) or (B) of section 1078 (a)(1) of this title dies or becomes permanently and totally disabled (as determined in accordance with regulations of the Secretary), then the Secretary shall discharge the borrower’s liability on the loan by repaying the amount owed on the loan.

I don’t know a lot about these student loan programs but I was curious enough to read some fo the links within the article.  Are there Dept. of Education regulations that delineate specific medical conditions that qualify as permanent and total disabilities?  It is hard to picture the Department of Education writing these kinds of regulations or making medical determinations.  Do they contract this function out?  What a mess.

Doug got it wrong.

SSDI is a disability INSURANCE program for which premiums were paid—by her if working or by her parents while they were working.

SSI is a pure WELFARE program—which can be cut off by Congress at any time. There are no premiums paid to cover this program. It is funded out of the general fund. Social Security merely administers the program because it is very efficient (cost effective) to do so.

SSDI has essentially THREE disability levels. MIP, MINE, and MIE.
MIE = Medical Improvement Expected (i.e. TYPICALLY improves). Medical reviews every three years.
MIP = Medical Improvement Possible (i.e. Might (NOT) improve). Medical reviews every five years.
MINE = Medical Improvement Not Expected (NOT expected to improve). Medical reviews every seven years.

So, it would depend on *which* category she was classified. If it was NOT the first one (MIP), then she is considered more-or-less permanently disabled.

I have been going through the process of having my student loans forgiven for about 7 years now. This whole time I have been on Soc Sec Disability. My requests were constantly denied because of items such as the date of my disability. Sallie Mae is also my loaner.

First of all, I developed a severe mental illness that progressed gradually, so what date do I say I became permanently disabled?

Finally after all these years I am making progress. I was told I had to go 3 years without making any substantial money. I have 1 year left, then they will forgive my loans. It’s flabbergasting that she only applied for forgiveness in 2010 and has already been accepted.

I have been hospitalized for my illness so many times that I am out of days. I am not allowed to recieve my disability check. It goes to someone else and says “To <Name> for Mark Crotts”

This has caused me more distress then I care to admit.

Barry Schmittou

Aug. 31, 2011, 9:40 a.m.

Hi Mark,

I am sorry to hear of your distress !!

If it will make you feel any better please look at two reports from my Psychologist that are seen at

Please cut and paste that in your web address bar and click enter.

I’m glad to hear you are making progress, and I hope you’ll stay focused on that. Deep breathing exercises, meditation and other relaxation techniques can help greatly.

I struggle with my religious beliefs, but I feel certain God exists because life is way too complex to just have happened without intelligent design.

I am a Christian, and the book the Power of a Praying Life by Stormie Omartian has been very helpful to me. I will add that there seem to be many people who profess to be great Christians while their actions are opposite of Christ’s example. Like I said I struggle, but I’m trying !!

Whatever your spiritual beliefs, I hope you will turn to them so you will know that you are not alone in your struggle.

Also please know that you are not alone in having difficulties being disabled, there are millions like us in the U.S., and when we become unable to produce work the benefits we have paid for and earned are often stolen from us.

Thank you for sharing your experiences, I hope and pray they will help others. God bless you and yours Mark.

As a historical note on the story, the reason that so many lenders are available for college students is that the Federal government guarantees all the loans they make.  So the banks are VERY generous lenders, in this case, knowing full well that if you can’t pay, then the government will.

But since that program isn’t funded to the point where it can handle such a guarantee, you have laws like Bush’s exclusion of student loans from bankruptcy and idiocy like some bureaucrat deciding exactly how disabled you are…and rarely in your favor.

It’s perhaps also worth considering that a college education isn’t what it’s cracked up to be anymore, and I say this (though I probably shouldn’t) as a long-term adjunct professor at my alma mater.

With “No Child Left Behind” and other initiatives, the kids are coming in less prepared when they clearly should have been left behind, or at least helped along by means other than paperwork.  Then, “standards” have homogenized many curriculums to what amounts to remedial work and political propaganda.  And to top it off, since everybody is guilted into going to college, the degree is no longer a discriminator.

But we’re pushed to spend/borrow more and more money to pay for the diploma when, frankly, most young adults (and old adults) would be far better served by directing their own learning.  Especially with the advent of the Internet—the largest library and peer review system you could ever wish for—it’s not hard to teach yourself much of anything for free on your own schedule and get experience on volunteer collaborative projects.  And if you’re not motivated to do so, at least you’re not wasting eighty thousand bucks when you go out binge drinking every night.

Of course, employers have had it beaten into their heads to require a degree to do anything more interesting than stocking shelves, so you can’t do that…

Anyone seeing a pattern with the Department of Education?  They waste everyone’s time, the taxpayer’s money, the media’s attention, and the borrower’s lives taking way, way too long to eventually decide to do nothing…about everything, except throwing little crumbs out to quell the masses when the media is around.

This is why I was so negative about the gainful employment debate from the get go.  This is why the entire office of federal student aid, at a minimum, needs to be investigated aggressively, provable crimes prosecuted, conflicts exposed, all of the decisionmakers ousted, and the whole thing redesigned, and staffed by people truly wanting to serve the public exclusively.

Obama vowed to fix what is broken.  This is the poster child.  Its the perfect project for him…completely under his control, essentially isolated from other agencies, and without question the right thing to do.

This article is part of an ongoing investigation:
College Debt

College Debt

Total outstanding college debt is estimated at $1 trillion dollars – and with costs still soaring, the burden on students and their families shows no signs of abating. We're examining how the complicated system of college debt is putting the squeeze on families.

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