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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.”
STUDENTS, FAMILIES STRUGGLE TO REPAY BILLIONS IN CRUSHING LOAN DEBTS
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.
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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.
The Associated Press contributed to this report.
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