Trump Signs Executive Order Forgiving All Federal Student Loan Debt For Disabled Vets

Aug 21, 2019
Originally published on August 21, 2019 8:14 pm
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AUDIE CORNISH, HOST:

Some welcome news today for disabled veterans with student loan debt - President Trump announced an executive order forgiving all federal student loan debt for vets who are permanently and totally disabled.

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PRES DONALD TRUMP: That's hundreds of millions of dollars in student debt held by our severely wounded warriors. It's gone forever.

CORNISH: He was speaking at the national convention of the group AMVETS. NPR's Quil Lawrence covers veterans. He's on the line now. Hey there, Quil.

QUIL LAWRENCE, BYLINE: Hey, Audie.

CORNISH: So can the president actually do this, to start? And what does it mean - this order that all federal debt would be forgiven for these folks?

LAWRENCE: Well, it's a lot easier to do it because this is actually a pre-existing program since 1965 - the Higher Education Act. It was amended in 2008. But the problem with that was that it was, essentially, opt-in. You had to know and apply to have your debt forgiven. Under the Obama administration, the - they had studied the social security rolls, found out who was disabled and who was in debt and sort of matched these records and found tens of thousands of people who were eligible and sent them letters. But the onus was on them to participate. Pressure kind of continued into the Trump administration for this to change. And in just January, 47 states' attorneys general had urged that they do something to make this easier. And there were bipartisan bills in Congress, so there was a lot of momentum for this to happen.

CORNISH: So what exactly does the executive order do in a new way?

LAWRENCE: Well, it makes it opt-out sort of automatically. If you qualify for this because you're a total and permanently disabled veteran, you don't have to do the paperwork anymore. You can opt out if you want. And there had been some concern about tax issues. If you get a debt forgiven, that can kind of get you in your taxes. The president said today he was going to act to allay that. And this is really welcome news for these veterans. Only half of the people who were eligible when they got that letter in the Obama administration had done anything about it, so the people who hadn't - now they'll have their debts forgiven.

CORNISH: I thought veterans got tuition benefits through the GI bill though. Can you run through this history again? I mean, shouldn't they be the last ones with student loan debt at all?

LAWRENCE: You would think so. The problem is that - in one - part of this problem is that vets have been really aggressively courted by for-profit colleges. Veterans actually end up making a really disproportionate number of students who are in default on their student loans. And part of this is because these for-profit colleges are so much more expensive and, often, give a less valuable degree than, say, community college. And I should say that education secretary Betsy DeVos has been criticized for being too friendly with for-profit colleges and rolling back Obama-era protections for students from for-profit colleges.

CORNISH: Do we know how many people will be affected?

LAWRENCE: The administration says about 25,000 who have an average debt of about $30,000 each, so we're talking about $750 million. There are questions about how quickly it'll roll out and what might be done for the tens of thousands of vets who are in default of their loans because, in some cases, the IRS could've garnished their wages or disability checks. Being in default of your student loans ruins your credit rating. An activist I spoke with at Veterans Education Success said she wants to know if they're going to do anything to repair the people who were - had their credit ratings damaged or wages garnished over the years. Another point that was made to me is that in this 50-year-old law, it applies to non-vets as well. So the president's announcement today really helps veterans who are permanently disabled and have student loan debt. But there may be 10 times as many non-vets, maybe hundreds of thousands of Americans who are disabled, and they're not even aware that they're eligible to have their debts forgiven. So it's great news for disabled veterans today, and maybe other people will also find out that they have been eligible all this while to have their federal student loan debt forgiven.

CORNISH: That's Quil Lawrence. He covers veterans for NPR.

Thanks so much.

LAWRENCE: Thanks, Audie. Transcript provided by NPR, Copyright NPR.