What to Know About Student Loan Disability Discharge

Life is unpredictable. When you become disabled and can no longer pay your loans, there are still options to help you. Students with total and permanent disabilities are eligible to have their federal student loan debt erased.

New regulations rolled out in September 2021 increased the number of borrowers eligible for student loan disability discharge. Some students may be automatically enrolled in the discharge process. However, others might have to apply for discharge. Here’s what you need to know:

Total and permanent disability discharge (TPD discharge) is a federal protection that forgives the student loans of individuals with permanent disabilities. It allows relief for individuals who may otherwise struggle to afford loan payments due to their disabilities. TPD discharge also removes TEACH Grant service obligations.

New regulations from the Education Department increased the number of individuals who qualify. The application process uses certification from physicians, Veteran Affairs, and Social Security Administration documentation.

So what disabilities qualify for student loan forgiveness? There is no set list of disabilities that determine eligibility for TPD discharge. Disabilities that qualify an individual for loan forgiveness are conditions that could potentially cause death or are expected to last for a continuous period of longer than 60 months.

Those living with a permanent disability are eligible for student loan forgiveness, including all federal student loans and grants.

Eligible loans included:

Along with loan forgiveness, TPD discharge removes the service obligations associated with a TEACH Grant.

An individual or their representative can apply for a TPD discharge. For some, the process is automated. Others may need to go through the application process and even reapply if denied.

Some individuals may be automatically enrolled for TPD discharge. A federal process implemented in 2021 automatically enrolls some individuals using data from the U.S. Department of Veterans Affairs (VA) or the Social Security Administration (SSA).

If you qualify for loan forgiveness based on information supplied by the VA or SSA, you will receive a letter informing you of your eligibility. You can decline any loan forgiveness but must do so by a certain deadline after receiving the letter. Otherwise, the federal government will automatically discharge your student loans.

If you qualify for TPD discharge but do not receive a notice, you can apply for TPD discharge. You may have to submit other documents that prove your eligibility.

Many people join the military to take advantage of the many VA education benefits. This includes the GI Bill, which covers the cost of in-state tuition for up to 36 months.

If you are a veteran applying for a TPD discharge, you must include documentation of your disability from the VA. This information will show that your disability is both complete and related to your military service or that your disability prevents you from meaningful employment.

Individuals qualify for a TPD discharge if they are already eligible for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI).

You can apply for SSA disability benefits online. Unless your disability is from amyotrophic lateral sclerosis, SSDI benefits do not begin until your sixth month of disability. It’s important to apply as soon as possible after becoming disabled.

You will need to submit a copy of your SSA award notice with your TPD application. The date of your initial SSA eligibility should be a minimum of five years before your next disability review.

You can also qualify for TPD discharge using documentation supplied by your physician.

The only physicians that can provide documentation of your disability are doctors of medicine (MDs) or doctors of osteopathic medicine (DOs). They must also be licensed to practice in the United States.

Your physician needs to complete section four of the TPD application, the physician’s certification, and include any supporting documentation of your disability.

Taking out private student loans to pay for college comes with its own set of risks, including higher interest rates and a lack of federal protections and forgiveness programs. This means that private student loans are not eligible for TPD discharge with the government.

Some larger private student loan companies will waive your remaining balance if you become permanently disabled. Unfortunately, in some cases, this means lenders will release the borrower but not the cosigner of these loans.

However, private student loan borrowers with disabilities might see some relief. An amendment introduced in April 2021 could require private loan companies to discharge loans for the borrower and cosigner if they die or are permanently disabled.

If you do not qualify for a TPD discharge, you are still obligated to pay your student loans and remain in good standing with your lenders. However, there are still options for relief.

You can reapply for a TPD discharge within 12 months of your original application denial. Follow the same process as before, but include information about your disability that you may have missed from your first application.

You can also apply for an income-driven repayment plan. This process calculates a reduced monthly payment for your student loans. Payments depend on how your income compares to poverty guidelines and your family size.

It is important to make a plan to pay your student loans. You can request payment deferment or forbearance. In most cases, your loans will continue to accrue interest.

Forbearance allows borrowers to either make smaller payments or pause payments for up to 12 months.

Deferment pauses payments for up to three years. Those who qualify for deferment have economic hardships, expensive medical bills, military service, or have returned to school.

If all else fails and you still struggle with payments, you can file for bankruptcy.

To discharge your student loans through bankruptcy, you must prove that you can’t make payments while also maintaining a minimum standard of living. While it is difficult to get student loans dismissed through bankruptcy, your loan may be at least partially discharged or you could be awarded a lower interest rate.

DISCLAIMER: The information provided on this website does not, and is not intended to, constitute professional financial advice; instead, all information, content, and materials available on this site are for general informational purposes only. Readers of this website should contact a professional advisor before making decisions about financial issues.