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US Treasury Required to Advise Student Loan Debtors of Disability Discharge

Empire Justice Center July 31, 2019

Each year, over 100,000 disabled Americans are needlessly endangered with homelessness, utility shut-offs, and hunger when their Social Security benefits are reduced to repay ancient student loans.  Many could avoid the loss of these safety net payments by applying for a disability discharge.  The problem is they are never told this option.

In Rodriguez v. DeVos, (2016-cv 5476, E.D.N.Y.), Johnson Tyler of Brooklyn Legal Services addressed this dilemma.  Now the U.S. Department of Treasury is required to tell borrowers to call an 800 number to apply for a disability discharge in the same letter that warns them of the impending Social Security garnishment.  (A copy of the new notice and the old, unconstitutional notices are available as DAP # 596).

Mr. Rodriguez and the other plaintiffs will get a full refund ($23,000) of the Social Security payments that were unconstitutionally taken.  In addition, the government agreed to send the notice to the disability recipient’s current address (usually the address on file with the Social Security Administration.)  The past policy was to send all notices of garnishment to the last address provided to the IRS in a tax return.  Such addresses were often old and wrong, given that most disability recipients with student loan debts are poor and hence are not required to file taxes.  The government also paid attorney fees of $50,000.00.

Congratulations to Johnson and Brooklyn Legal   Services. Johnson is a former DAP advocate and has been a tireless defender of consumer rights for low income and disabled New Yorkers.  We applaud his success in this case, which was recognized in the  media.