President Trump signed
an executive order on Wednesday that forgives all student loan debt for any
permanently disabled U.S. military
veterans.
The order,
which Trump signed following a speech at the American Veterans National
Convention in Louisville, Ky., also clears those eligible veterans from having
to pay any federal income tax on the loans. Trump added that he is pressuring
individual states to follow suit.
“The debt of these disabled veterans will be completely erased,”
Trump said. “That’s hundreds of millions of dollars of student loans debt for
our disabled veterans that will be completely erased.”
The memo
Trump signed directs the government to develop an "expedited" process
so veterans can have their federal student loan debt discharged "with
minimal burdens." Currently, just half of the roughly 50,000 disabled
veterans who are qualified to have their federal student loan debt forgiven
have received the benefit because of a burdensome application process.
Under the current process, disabled veterans can have their debt
forgiven under a loan forgiveness program, called Total and Permanent
Disability Discharge, or TPD, as long as they have a VA service-connected
disability rating of 100 percent. As of July, however, only about 20 percent of
the eligible pool of veterans had taken advantage of the program due to
the complicated nature of the application and other factors.
Trump’s
announcement comes days after the administration hired a longtime student loan
industry executive to be the federal government's top watchdog for the student
loan market. Robert Cameron will serve as the Consumer Financial Protection
Bureau's new student loan ombudsman, the bureau said Friday.
It's a job designed to protect student loan borrowers from poor
practices in the student loan industry and one of the few positions explicitly
named in the Dodd-Frank Act, the law passed after the 2008 financial crisis
that created the bureau. It's considered the go-to office for borrowers who
have complaints about their loans. Cameron most recently worked at the
Pennsylvania Higher Education Assistance Agency, better known as FedLoan
Servicing, as its head of compliance and risk mitigation.
PHEAA has been cited for poor industry practices, most notably for how
it has handled the troubled Public Service Loan Forgiveness program, a program
designed to allow student loan borrowers who work in public service jobs to get
part of their loan balances forgiven. The executive order also comes as
student loan forgiveness has become a major talking point among the 2020
Democratic presidential primary candidates, with contenders like Sens. Bernie
Sanders of Vermont and Elizabeth Warren of Massachusetts pushing plans to
completely wipe out student loan debt nationwide.
Currently, Americans hold around $1.6 trillion in student loan
debt.
- FOXnews
The
Associated Press contributed to this report.
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