Democrats Introduce Bill To Discharge Private Student Loans For Borrowers And Cosigners Due To Disability – Forbes
House Democrats today introduced a bill that would allow disabled borrowers to fully discharge their private student loans.
The bill, the Private Loan Disability Discharge Act (H.R. 2498), would require private student loan lenders to discharge the loan balance for both the student loan borrower and any co-signer if the borrower becomes totally and permanently disabled.
Currently, there is a federal Total and Permanent Disability (TPD) discharge program that allows borrowers to discharge their federal student loans on the basis of a medical impairment. But there is no such program for private student loan borrowers. Some private lenders do offer a disability discharge in certain circumstances, but such programs are discretionary, and availability of these private student loan disability discharge options is uneven at best. Furthermore, even when these programs are offered and a discharge is granted, the cosigner may still be responsible for repaying the student loan, even if the borrower is released from their obligation.
“A constituent brought this issue to our attention… her daughter had become totally disabled and she was left with the remaining balance of her private student loans as the cosigner, ” said Rep. Madeleine Dean (PA-04), who sponsored the bill, in a statement. “The lending company said they would forgive the loan for the borrower, but not for the cosigner – so we wrote H.R. 2498 to address this unfair practice, and to ensure student loan borrowers are protected in the case of these terrible circumstances.”