Two thirds of American students graduate college owing money for student loans. Often ranging in the tens of thousands of dollars, these loans are a burden even to the students who are lucky enough to graduate with a full-time job.
But what happens when a graduate becomes disabled and is unable to work? According to federal law, these types of borrowers are entitled to have government student loans forgiven by the Department of Education. But as we reported yesterday, the process of discharging the loans of disabled borrowers is broken, with many applicants being rejected for unclear reasons.
“I've spoken to at least 20 people who have been through this process, and it is really, really tough on them,” says Sasha Chavkin, our lead reporter on the story. “I've heard borrowers say that they can't believe this is America. I've heard borrowers say that it's some of the most humiliating exchanges that they've been through, that they're calling in because they're disabled and want to get their loans discharged, and they feel as though they're treated like they're crooks.”
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Mike Webb: Hi, I'm Mike Webb, and welcome to the ProPublica podcast.
This week, we're going to talk about what happens when you can't pay back your student loan – not because you're on the downside of the economy, but in cases where unexpected things happen to people and they have no way of earning money to pay back their loan.
Congress actually foresaw this possibility and made arrangements with the Department of Education to forgive disabled people's debts. But for many Americans, forgiveness might not be the first thing that comes to mind in their dealings with the Department of Education.
Joining us in the storage closet studio is ProPublica's Sasha Chavkin. He worked along with Cezary Podkul, Jeannette Neumann, and Ben Protess on a story that reveals how the process for discharging loans of the disabled is a discouraging and dysfunctional system that too often leaves people in disarray.
Welcome to the podcast, Sasha.
Sasha Chavkin: Thanks, Mike. Good to be here.
Mike: Why don't we set it up like this? You just took out a $50,000 student loan, and you hurt your back and you can no longer work. How do you pay back the loan?
Sasha: Well, what the law says is that if it's a federal loan and I'm fully disabled for at least five years, then the government is supposed to forgive my debt. But what our story has found is that the program for discharging that debt is broken.
Mike: How'd you find that out?
Sasha: We've spoken with a lot of borrowers who've been through this process, and also we've found a number of internal reports from an ombudsman at the Education Department that we got through public record requests.
Mike: And what did they say?
Sasha: Which describe these very basic problems with the program. There are no published medical standards for determining who's eligible. It's basically if the Department says you're disabled enough, then you get it. If not, then you don't.
There's no formal appeals process for denials. The costs and the time of applying for a discharge falls on the applicant. You have to pay to go to your doctor and get them to fill out the forms that are required for this.
And they don't accept determinations from Social Security. So you can be found to be fully disabled by Social Security, and the Education Department won't accept that that's enough evidence to discharge your loan.
Mike: Why not? Because they're experts in this? They have the experience to know if someone is able or not?
Sasha: Well, they have a standard that's set out for them by Congress, which, as I described, says you have to be fully disabled for at least five years. They say once you discharge a loan, that's a permanent decision, whereas Social Security could cut someone off of benefits if they decided that they've recovered.
But nonetheless, the process that they have in place, experts have told us, is leading many people who should be eligible not to get the relief that they're entitled to.
Mike: How did this law come about? Who mandated this?
Sasha: Well, back in 1965, when Congress and President Lyndon Johnson set up a federal student loan program, huge amounts of federal support for student loans, they decided that they wanted to have a compassionate provision in there for someone who really was unable to work and unable to pay back the loans that they got.
So in the bill establishing the federal student loan program, they wrote in an exception for someone who becomes totally and permanently disabled. They set such a high standard because they wanted people to pay the government back the money that they were taking out.
The Congress, in 2008, made the standard for discharge five years of full disability instead of an indefinite or terminal disability, in part because they were seeing how troubled this program was and how bad the experience was for borrowers.
Mike: Why don't we talk about the case of Tina Brooks? You featured her prominently in the story. Why don't you tell people what happened with her?
Sasha: Absolutely. Tina is a former police officer, who in 2000 went out on a training in bicycle patrol. And while she was out there, she fell 15 feet on her bicycle down the side of a rock quarry.
Sasha: From that accident, she has become fully disabled. She fractured a vertebra in her back, damaged three others in her neck, and now has back pain that is so severe she can't sit or stand up for more than about half an hour at a time.
Mike: OK, and Social Security Administration has said she is...
Sasha: Yes, in 2006, the Social Security Administration found that she was fully disabled. But since 2005, she has been struggling with the Education Department to discharge about $43,000 in federal student loans.
Mike: When you say struggling, what do you mean?
Sasha: I mean she's submitted a total of four applications now. She's been rejected several times without clear explanation.
Mike: She doesn't get a letter? She can't get someone on the phone to say?
Sasha: She gets customer service representatives who often tell her different things. Because there aren't written medical standards, she hasn't been able to get a clear answer about what exactly it is that she's missing.
She has frequently been told that she needs to provide more information, even when she's already provided that information before.
Over this time, the interest on her loan has been accruing, and she now owes about $4,500 more than she did when she first asked the Education Department to forgive her for this debt.
Mike: OK Sasha, you wrote about a guy named Scott Creighton, and you wrote, "He's a former carpenter and draftsman living in Tampa, Fla., and was declared disabled by the Social Security Administration in September 2009.
"Three years before, he had suffered a pulmonary embolism ‑‑ a blood clot that traveled from his leg to block the main artery of his lung ‑‑ that left him unable to work for a full day or repay his federal student loans."
So soon after, Mr. Creighton was contacted by a debt collection agency. However, they sent him a rejection letter that said he had failed to prove that his condition had not existed when he took out the loans, even though he obtained the last of his federal loans in 1993, more than a decade before the embolism happened.
The Department of Education then began garnishing his wages from his Social Security check. We spoke to Scott, and he explained some of his frustration.
Scott Creighton: It's so funny. I'm at the worst place in my life I guess I could ever be. I'm glad that Social Security, they found me disabled and they're helping out.
I didn't get a degree. I've never made money off of my degree. I've always worked with my hands ever since I left college. It's not like I'm profiting from it. This isn't a car that I bought. This isn't a coat that I bought. It's not even a house. It's not something that I adorned myself with. This is just trying to get an education, and I failed. I dropped out. Now I'm not saying that you should be forgiven your loan for that, but in certain cases, especially when somebody is disabled. I mean, why would you do that?
If I want to make a deal with a collection agency to pay them $170 a month, if they had gone down to that, and I had done that up to nine months, then they could actually renegotiate my loan, take it off as a bad debt. Then I could actually try to rehabilitate my life.
But you can't do that. They don't give you that kind of credit for it. So I'm stuck in this limbo, and it sticks you in this limbo aside from taking 15% of people who don't have anything.
Aside from doing that, they don't even give you that kind of credit for it, so you can't go back and try to remake my life and try to become some kind of productive member of society. It's just I can't do what I used to do as a carpenter. I was an installer, a draftsman. I can't do these things anymore.
Mike: Sasha, is that frustration typical?
Sasha: I've spoken to at least 20 people who have been through this process, and it is really, really tough on them. I've heard borrowers say that they can't believe this is America. I've heard borrowers say that it's some of the most humiliating exchanges that they've been through, that they're calling in because they're disabled and want to get their loans discharged, and they feel as though they're treated like they're crooks.
Obviously, these are people who have had really bad experiences. Nonetheless, listening to what they've gone through is really remarkable.
Mike: Now you also wrote that between 2007 and 2009, just under 180,000 people had tried to have their student loans discharged. Is this really affecting a wide number of people?
Sasha: Well, the number that you just cited, just under 180,000 people who applied over three years, is the number of people whose applications made it to the Education Department's review. But before the Education Department even looks at it, they first have to apply to lenders and guarantors who are often subsidized by the Department of Education.
The fact is we don't know how many people are affected by this because the Department of Education is not keeping track of what's happening in the earlier stages of the process before these borrowers get to them.
That's really one of the other major issues with the program the ombudsman has called the Department to address.
Mike: What do the ombudsmen say? Did they have specific fixes?
Sasha: Since 2008, the ombudsman has laid out a number of very specific things that the Department should be doing to fix this. They should publish medical standards that explain what conditions a borrower had that would qualify. They've called on them to increase the transparency of the process, to add appeals to it, to improve communication, which the Department says that it has done.
Most significantly, they have called on the Department to consider having Social Security Administration do the whole review for them.
So basically, in both 2008 and '09, the ombudsman suggested that maybe the Department of Education should get rid of its program altogether and allow the Social Security Administration, which it describes as having a mature and proven process for evaluating disability, make these decisions on its behalf. But none of that has happened.
Mike: And why not? I mean, it sounds like it's a relatively easy fix. Why hasn't the Department of Education acted?
Sasha: Well, the concerns that they raise are about whether the Social Security Administration can make a determination that fits the legal guidelines that the Department of Education has to follow in deciding whether to forgive these loans.
But the fact is, since the law in 2008 changed the standard to five years of full disability, that's the exact same thing as a diagnosis the Social Security Administration can make, a diagnosis called ‘medical improvement not expected.’
So why the Education Department doesn't accept Social Security determinations and doesn't allow Social Security to make decisions on its behalf is really unclear at this point.
Mike: Sasha, thank you for joining us.
Sasha: Thank you, Mike.
And now our “Officials Say the Darndest Things" quote of the week is: "I'm here in the interest of being more neighborly. I strolled over from across the street. And look, maybe if we – if we had brought over a fruitcake when I first moved in, we would have gotten off to a better start."
Who said it? President Barack Obama, while addressing the U.S. Chamber of Commerce, which happens to be one city block away from the White House.
All right, we'll be back with another show soon. This podcast was produced by Minhee Cho. For ProPublica, I'm Mike Webb. Thanks for listening.
Transcription by CastingWords