Unseen Costs: Navigating Student Debt and the Disability Tax in America

An artistic rendering of a wheelchair user in a cap and gown. His hands are clasped and he looks depressed. Above him, a chain link.

As we enter the final week of May, dedicated to highlighting mental health awareness, it's essential to discuss student loan debt and the "disability tax" — colloquially known as the Crip Tax.

This invisible tax represents the extra expenses incurred by those with disabilities, ranging from increased transportation costs and frequent medical appointments to accessible housing requirements and assistive technologies. According to the National Disability Institute, people with disabilities pay an extra $17,690 each year to maintain a similar standard of living as a household without a member with a disability. When combined with the burden of student loan repayment, the financial landscape becomes increasingly challenging.

An analysis from the U.S. Department of Education reveals a shocking truth — nearly one-third of borrowers hold student loan debt without possessing a degree. Research from the Education Data Initiative found that the average public university student borrows $31,410 to attain a bachelor’s degree. Moreover, the National Center for Education Statistics (NCES) reports that the six-year graduation rate for students with disabilities at four-year colleges is 49.5%, compared to approximately 68% for students without disabilities.

Existing student loan forgiveness programs often overlook these hardships. The Public Service Loan Forgiveness (PSLF) program, for instance, mandates a 10-year commitment to public service employment, a condition untenable for many.

Income-Driven Repayment (IDR) plans, though ostensibly beneficial, have inherent flaws. By concentrating on annual disposable income, these plans can impose disproportionate repayments on disabled borrowers with lower incomes. This issue becomes especially glaring when considering that the labor force participation rate for individuals with disabilities is 38.3%, with an unemployment rate of 7.0%. In contrast, the same statistics for people without a disability are 77.4% and 3.0% respectively according to the latest data from the U.S. Department of Labor.

The Total and Permanent Disability (TPD) discharge — a beacon of hope — fails to provide relief for all. Qualification is often a convoluted process, leaving many behind.

The pending Supreme Court case concerning widespread student loan forgiveness might not benefit many in our community. Why? Because it primarily centers on forgiveness that doesn't affect monthly payments for those of us still carrying debt. In contrast, IDR plans are designed to adjust loan payments based on income, with forgiveness occurring for most at the 25-year mark.

We urgently need further modifications to IDR plans. Calculations should include disability status and consider our elevated cost of living. Incorporating these added costs into the monthly payment formula could provide significant relief.

The weight of student loan debt should not disproportionately rest on our shoulders.

The Disability Wage Gap and Student Loan Forgiveness

Over the past several months the Biden administration has racked up impressive wins related to targeted student loan forgiveness. U.S. Department of Education touted its successes in a July 6 press release noting $26 billion in relief for various groups.

• Approximately $8 billion through borrower defense;
• Nearly $8 billion to borrowers who are totally and permanently disabled; (TPD)
• More than $9 billion to public servants through the PSLF program; and
• Over $1 billion in closed school discharges.

As Forbes contributor Adam S. Minsky noted today, those numbers are steadily climbing as the administration seeks more relief.

For the disabled borrower however, discharge through TPD is limited and leaves many scrambling for relief.

Consider:

The TPD discharge, aimed at helping disabled borrowers who are unable to sustain gainful employment, does not apply to everyone. Currently 323,000 individuals have been granted relief under this program.

Additionally, $7 billion of the total forgiven under TPD is thanks to a data-sharing effort between the Department of Education and Social Security Administration identifying qualified applicants currently receiving SSI or SSDI. According to the latest data, just over 12 million people between 18-64 are enrolled in either program, accounting for 32% of U.S. disabled adults in that same age range based on U.S. Census Bureau data.

While exact figures on disability and student loan debt remain illusive, it’s likely there remains a large percentage of disabled borrowers not covered under TPD who struggle repaying student loans while employed.

Our path to employment is already a challenging one. Beginning in academia, we battle with questions surrounding disclosure, seeking accommodations, and administrative hurdles. According to a 2017 report from the National Center for Learning Disabilities (NCLD), the process is often so cumbersome many don’t seek the support they need and thus are at an increased risk for not graduating. Postsecondary National Policy Institute (PNPI) notes 40% of undergraduate students with disabilities who started in 2011 graduated with a bachelor’s degree from the same institution by 2017, compared to 57% of students without disabilities.

When we do graduate, the struggles continue in our job search as we work to dismantle ableism and misconceptions about our abilities in the workplace. Consequently, it's no surprise only 4% of employees are openly out as disabled at work according to Disability:IN. The potential earnings discrepancy highlights another barrier. Research from The Century Foundation and Center for Economic and Policy Research shows we earn an average 26% less compared to our non-disabled colleagues.

We must find a way to provide relief to disabled borrowers working to pay off student loans.

#studentloans #studentloanforgiveness #disability #wagegap