Disability & Student Loan Debt

When you were in school you had high hopes for the future. To get your degree you may have taken out some hefty loans with plans to make enough money to pay them back. But what if you have been seriously injured in an accident or you suffered a debilitating disease or mental illness and are no longer able to work? How can you pay back a student loan with only a modest disability check?

If this is your situation, we have some good news for you. Debt relief is available to both disabled veterans and for those drawing Social Security disability payments. According to disabilitydischarge.com (a U.S. Department of Education website), if you are totally and permanently disabled, you may qualify for a total and permanent disability (TPD) discharge of your federal student loans or TEACH Grant service obligation. If you receive a TPD discharge, you will no longer be required to repay your loans or complete your TEACH Grant service obligation. 

To erase your old debt you must first demonstrate that you are totally and permanently disabled. The Department of Education spells out three ways to do this.

  1.   If you are a veteran, you can submit documentation from the U.S. Department of Veterans Affairs (VA) showing that the VA has determined that you are unemployable due to a service-connected disability;
  2.   If you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can submit a Social Security Administration (SSA) notice of award for SSDI or SSI benefits stating that your next scheduled disability review will be within 5 to 7 years from the date of your most recent SSA disability determination; or
  3.  You can submit certification from a physician that you are totally and permanently disabled. Your physician must certify that you are unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that:
  • Can be expected to result in death;
  • ​Has lasted for a continuous period of not less than 60 months; or
  • Can be expected to last for a continuous period of not less than 60 months.
  • Where do you begin? The Department of Education prefers that you first contact your loan servicer to start the Total and Permanent Disability discharge process. Or you can start the process online at disabilitydischarge.com.

Once your application is approved, you will be required to provide your financial information annually for a period of three years. If you don’t comply with this requirement, your loan obligation will be reinstated. After three years of faithfully providing your financial information, your student loan debt will be erased. Bear in mind, however, that since loan forgiveness is considered income, there may be tax ramifications. We encourage you to consult a tax professional before applying for a TPD.

Sean D. Cuddigan
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SSA and VA Disability Attorney in Omaha, Nebraska
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