A debilitating sickness or injury can be life-changing and make it challenging or impossible to pay back student loans. Because of this, borrowers who are considered “totally and permanently disabled” may qualify to have their student loans discharged through a federal forgiveness program known as Total and Permanent Disability Discharge.
Since this is a federal program, it only applies to federal student debt and not private student loans. Here’s what to know about student loan disability discharge, what disabilities qualify for student loan forgiveness, and who is eligible for the program.
Disability Discharge of Student Loans
Student loan disability discharge relieves borrowers of their student loan responsibilities in the event of total and permanent disability. Receiving a Total and Permanent Disability (TPD) Discharge from the U.S. Department of Education means that a qualifying borrower does not need to pay back federal student loans or complete a TEACH Grant service obligation.
Can Student Loans Be Forgiven Due to Disability?
Federal student loans can be forgiven due to disability. Borrowers interested in a disability discharge need to apply for the program and provide documentation to show that they are considered “totally and permanently disabled.” The Department of Education will review the application to determine if an applicant qualifies.
In some instances, the Department of Education may receive information from the Social Security Administration (SSA) or the U.S. Department of Veterans Affairs (VA) that an individual may qualify for a disability discharge of student loans. In these cases, the Department of Education may contact a borrower to provide information about requesting a TPD discharge.
Again, the student loan disability discharge program only applies to federal loans, such as Direct Loans, FFEL Program Loans, or Perkins Loans. This program doesn’t apply to private student loans.
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What Is Student Loan Total and Permanent Disability Discharge?
A Total and Permanent Disability Discharge means that a qualifying borrower will not be required to pay back federal student loans or complete a TEACH Grant service obligation.
Loans included in the program are those issued by the William D. Ford Federal Direct Loan Program (Direct Loans, also known as Stafford Loans), the Federal Family Education Loan Program (FFEL), and the Federal Perkins Loans. Borrowers in a TEACH Grant service program may also be relieved from having to complete whatever service obligation remains in their program.
Applying for Student Loan Disability Discharge
If you would like to apply for a disability discharge of student loans, the first step is to fill out a TPD discharge application. The U.S. Department of Education works with Nelnet, a service provider, to process the applications. All correspondence will come from Nelnet, not the DoED.
You’ll also need to gather together documentation showing that you meet the Department of Education’s requirements for being “totally and completely disabled.” There are three ways to provide the necessary documentation:
1. Through the VA
If you are a veteran, you can work with the U.S. Department of Veteran Affairs (VA) to provide the documentation needed to prove that you are permanently disabled from a service-related injury.
2. Through the Social Security Administration
If you are already receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can use documentation from the Social Security Administration (SSA).
3. Through a Physician
You also can have a physician (an MD or DO) certify that you are unable to earn money in any substantial way due to a physical or mental impairment. If you want to take this route, you’ll need to complete your application within 90 days of the physician signing your TPD. Here are the current official qualifications:
• The impairment could result in death.
• The impairment has lasted for a continuous period of at least 60 months.
• The impairment can be expected to last for a continuous period of at least 60 months.
What Happens if I’m Approved for Student Loan Disability Discharge?
It depends on whether you were approved for a disability discharge through the VA, the SSA, or your physician.
If you provided documentation from the VA, the following will happen upon approval:
• You’ll be notified of the discharge
• Your loan holders will be instructed to return any loan payments received on or after the effective date of the disability determination
Recommended: Examining How Student Loan Deferment Works
If you provide documentation from the Social Security Administration or from your physician, there will be an additional step if you qualify: You’ll be notified that you are subject to a three-year monitoring period. Your loans or TEACH work obligation could be reinstated if you don’t meet certain requirements at any time.
During the monitoring period, your obligations may be reinstated in the event that:
• Your annual earnings from employment exceed the poverty guideline amount for a family of two in your state, regardless of your actual family size.
• You receive a new federal student loan under the Direct Loan Program or a new TEACH Grant.
• You receive another payment of a Direct Loan or a TEACH Grant that was first disbursed before your discharge was approved, and the new disbursement has not been returned to the loan holder within 120 days of the disbursement date.
• You receive a notice from the SSA stating that you are no longer disabled.
It’s important to understand that the DOE and Nelnet will monitor your ability to earn an income during this time. Your loans will resume in the event that you can earn an income above the poverty line, you receive new federal loans, or the SSA determines that you’re no longer disabled.
What Is Student Loan Refinancing?
If you don’t qualify for a TPD discharge, there are other options for lowering student loan costs. You can contact your loan servicer to find out if you’re eligible for deferment or forbearance — or to see if you’re eligible for an income-driven payment plan. You may be able to extend your loan term to lower your monthly payments (though you’ll end up paying more in interest over the life of the loan.)
Refinancing your student loans can also help you lower your repayment costs. Some lenders, like SoFi, can refinance both federal and private loans.
Because you’re using a new loan to pay off an existing loan, it’s also possible to change the terms of the loan, such as securing a lower interest rate or shortening the loan term (both of which mean saving interest over the life of the loan). You could also lengthen the loan term (which, again, can lower your monthly payments, but potentially result in paying more interest over the life of the loan).
Keep in mind that if you refinance federal loans, you’ll lose access to federal benefits and protections, including eligibility for TPD, income-driven repayment, or other federal loan programs such as deferment or forbearance. If you think you might want to pursue a disability discharge or other federal loan programs in the future, refinancing your federal loans may not be a good choice for you. If you have private loans, however, it may be worth exploring.
Refinancing Student Loans With SoFi
Refinancing could save you money over the life of the loan, especially if you can qualify for a lower interest rate. But it’s important to understand that refinancing is done with a private company, and therefore, the new loan is a private loan without access to federal benefits and protections, such as a TPD discharge.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
What disabilities qualify for student loan forgiveness?
To receive federal loan forgiveness under the Total and Permanent Disability Discharge program, you must have a mental or physical disability that severely limits your ability to work now and in the future. You’ll need to provide documentation of this total and permanent disability through the VA, the SSA, or a healthcare provider.
Can you get student loan forgiveness if you become disabled?
A borrower can apply for a student loan disability discharge only if they become totally and permanently disabled. An individual who qualifies for a TPD discharge is not required to pay back their student loan or complete their TEACH Grant service obligation.
Do you have to pay back student loans if you are on disability?
If a person is receiving SSDI or SSI benefits from the Social Security Administration and their next disability review is not for another five to seven years, then a person is considered totally and permanently disabled and eligible to apply for a TPD discharge. A three-year monitoring period follows a TPD discharge that is based on documentation from either the SSA or a doctor.
SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
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