Recommendation: To preserve the balance between the importance of repaying federal student loan debt and protecting a minimum level of Social Security benefits put in place by the Debt Collection Improvement Act of 1996, Congress should consider modifying Social Security administrative offset provisions, such as by authorizing the Department of the Treasury to annually index the amount of Social Security benefits exempted from administrative offset to reflect changes in the cost of living over time.
Agency: Congress
Status: Open
Comments: As of December 2018, Congress has not yet taken action on this matter.
Recommendation: To improve program design for Social Security offsets and related relief options, the Secretary of Education should inform affected borrowers of the suspension of offset and potential consequences if the borrower does not take action to apply for a TPD discharge. Such information could include notification that interest continues to accrue and that offsets may resume once their disability benefits are converted to retirement benefits.
Agency: Department of Education
Status: Open
Comments: The Department of Education does not currently notify borrowers of the suspension of offset, but plans to implement a process to do so in the future using a new mailing sent to affected borrowers by their default servicer. The current budget situation does not allow for this type of enhancement, and it is not clear when that will change. In the interim, the agency is exploring alternative notification approaches that could be put in place prior to the implementation of an automated solution. Although Education reported in December 2018 that it has implemented this recommendation, we will consider closing it when we receive documentation that this effort has been completed. As of October 2020, Education's website includes information about the suspension of offset. However, affected borrowers may not know to check the website and the agency has not provided documentation that it has directly alerted affected borrowers.
Recommendation: To improve program design for Social Security offsets and related relief options, the Secretary of Education should revise forms sent to borrowers already approved for a TPD discharge to clearly and prominently state that failure to provide annual income verification documentation during the 3-year monitoring period will result in loan reinstatement.
Agency: Department of Education
Status: Open
Comments: The FUTURE Act (H.R. 5363), signed into law on Dec. 19, 2019, requires the Department of Education (Education) to automate the income monitoring process for borrowers whose loans are discharged for total and permanent disability. As a result of automating the process, borrowers will no longer need to receive Education's forms requesting the borrower to individually provide their income verification documentation during the 3-year monitoring period.
Recommendation: To improve program design for Social Security offsets and related relief options, the Secretary of Education should inform borrowers about the financial hardship exemption option and application process on the agency's website, as well as the notice of offset sent to borrowers.
Agency: Department of Education
Status: Open
Comments: The Department of Education agrees with the recommendation and said that they will include this change in upcoming revisions to the agency's web content. The agency reported that the Notice of Offset to borrowers is sent by Treasury and that they will share this recommendation with Treasury and discuss possible changes to the notice. As of October 2020, Education's website notes that borrowers can request a review of their offset , but it does not specifically note that they may do so because of a financial hardship. Although Education reported in December 2018 that it has implemented this recommendation, we will consider closing it when we receive documentation that the agency has notified borrowers about the financial hardship exemption process on its website and the notice of offset sent to borrowers.
Recommendation: To improve program design for Social Security offsets and related relief options, the Secretary of Education should implement an annual review process to ensure that only eligible borrowers are exempted from offset for financial hardship on an ongoing basis.
Agency: Department of Education
Status: Open
Comments: The Department of Education reported that it plans to fully automate their process for tracking hardships and other exceptions from offset. However, due to competing priorities and funding limitations, full implementation of these improvements have not been scheduled. As they fully implement this process, they will review complementary strategies to assist borrowers in complying with annual reporting requirements. As of December 2018, Education reported that it is in the process of re-designing the student loan financial services environment, which will lead to major improvements such as offset exceptions. They are conducting market research on the new environment, then plan to develop requirements and timelines in support of a procurement with a projected completion in September 2020. We will consider closing this recommendation when we receive documentation that the agency has implemented an annual review process.
