Student Loan Forgiveness for People with Disabilities

Many people with disabilities are struggling with student loans they cannot afford to pay. When you have a disability, one of the easiest ways to get student loan relief is through the Total and Permanent Disability (TPD) discharge program. Keep reading to learn more!

Loan Forgiveness

The Department of Education offers several loan forgiveness programs for federal student loans. Unfortunately, there aren’t forgiveness programs available for private student loans. The most common ways to get loan forgiveness are through the Public Service Loan Forgiveness (PSLF) program, which requires working for a qualifying employer for 10 years, or Income Driven Repayment (IDR) cancellation, which requires making payments on an Income Driven Repayment plan for 20-30 years. However, Total and Permanent Disability discharge is a fast and easy way to get relief if you have a disability!

Total and Permanent Disability Discharge

Total and Permanent Disability discharge is a loan forgiveness program for people who are unable to work because of an ongoing disability. It’s much easier to qualify for Total and Permanent Disability discharge than it is to qualify for Social Security disability benefits. There are three ways to show that you qualify for Total and Permanent Disability discharge: by receiving VA disability, by receiving SSI or SSDI, or with certification from a medical professional.

VA Disability and TPD

If you receive VA Disability benefits due to a service-connected disability and have a 100% disability rating, you qualify for Total and Permanent Disability discharge! You will need to submit your Benefit Summary and Service Verification Letter to demonstrate your eligibility.

SSI, SSDI and TPD

If you receive SSI and/or SSDI, you may be eligible for Total and Permanent Disability discharge, but it depends on if you can meet one of the Department of Education’s conditions. You’re likely eligible if you meet one of these conditions:

• Your next Continuing Disability Review is 5-7 years from the date of your last disability determination.
• Your next Continuing Disability Review has been scheduled at 3 years.
• Your disability established onset date is at least 5 years before you apply for Total and Permanent Disability discharge (meaning you’ve been eligible for your benefit for at least 5 years).
• You qualified for SSI or SSDI based on compassionate allowance.

You may also be eligible for Total and Permanent Disability discharge if you receive Social Security Retirement benefits now but received SSI or SSDI immediately before being switched to retirement benefits and met one of the above requirements.

To show that you meet one of these conditions, you will need to provide your Social Security Notice of Award letter (this is different from a benefits verification letter, it will read “Notice of Award” at the top) or a BPQY.

TPD for People Not Receiving Disability Benefits

If you don’t receive VA or Social Security benefits or don’t meet the conditions for receiving Total and Permanent Disability discharge for the benefit you do receive, you may still qualify for forgiveness. If you are unable to work because of a disability, you can have a licensed medical professional (like a MD, DO, NP, or PA) certify that you are unable to engage in what the Department of Education calls “substantial gainful activity” (doing significant work for pay) because of an impairment that has or will last 5 years or is expected to result in death. (The Department of Education defines substantial gainful activity differently than Social Security.)

How to Apply

Some people who receive VA or Social Security benefits may get a letter letting them know they have received automatic discharge. For those that haven’t received a letter, you can submit a Total and Permanent Disability discharge application through your studentaid.gov account or by using a paper application from the TPD Application page. Applicants will be asked some questions about their situation and be prompted to upload documentation showing they are eligible. If you are applying based on a medical professional’s certification, you can provide your doctor’s email address and they will receive a link to your application to provide their certification electronically.

After Applying

Once you submit your application and upload any required documentation, your student loan payments are paused for 120 days while the Department of Education processes your application. Most applications are processed during this 120 day time period.

If your application is approved, you no longer have to pay back your loans, but you enter a 3-year post-discharge monitoring period. If you qualified with VA Disability documentation, you do not have to complete the monitoring requirement. During the monitoring period, if a borrower takes out any new student loans or a TEACH grant, they lose their Total and Permanent Disability discharge and will have pay their loans back.

Receiving Total and Permanent Disability discharge may be considered taxable income depending on where you live and when you received the discharge. It’s a good idea to talk with a tax professional to understand your tax obligation.

If you decide to go back to school at any time after receiving Total and Permanent Disability discharge (including during the monitoring period) and would like a new student loan, you will have to get a letter from a doctor stating that you are able to engage in substantial gainful activity. You also won’t be eligible for Total and Permanent Disability discharge again if you become unable to work in the future because of a disability.

If your application is denied, you will have to start making loan payments again. You can ask the Department of Education to reevaluate their decision if you are able to provide new information showing you are eligible.

If you have questions about applying for Total and Permanent Disability discharge, a Financial Coach at Northwest Access Fund can help!