Lori Meadows
If you have a disability and are wondering about your student loan obligations, there are a few things to consider. Firstly, it depends on the type of loan you have. Federal student loans may be eligible for a Total and Permanent Disability (TPD) discharge, meaning you won't have to repay them. To qualify for a TPD discharge, you must be unable to engage in any substantial gainful activity due to a severe, long-term physical or mental impairment. Additionally, if you receive disability benefits from the Social Security Administration (SSA) or are a disabled veteran, you may also qualify for loan forgiveness. Private student loans may offer disability discharges, but access to loan forgiveness in this case may be more limited.
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What You'll Learn
Eligibility for loan discharge
If you have federal student loans, you may be eligible for a "total and permanent disability" (TPD) discharge if you become disabled. This means that you won't have to repay the loans. To be eligible for a TPD discharge, your disability must be severe and long-term, and you must be unable to perform any "substantial gainful activity", such as work involving significant physical or mental activities, due to a "medically determinable" physical or mental impairment.
You can apply for a TPD discharge if you receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits. To qualify, your next continuing disability review must be scheduled within five to seven years of your last SSA disability determination, or your medical onset date for SSDI or SSI must be at least five years before you apply for TPD discharge. You can also qualify for TPD discharge if you receive disability benefits from the Department of Veterans Affairs (VA). In this case, you will need to provide documentation of when the VA awarded you the disability determination.
Additionally, you can get a TPD discharge if your doctor or licensed healthcare provider submits a certification confirming your eligibility. This certification can be submitted electronically or manually. If you receive disability benefits from the Social Security Administration (SSA) or the VA, you may not need to submit any additional paperwork. However, if you borrowed student loans from a private lender, your access to loan forgiveness in the case of disability may be limited, although some private lenders will forgive the remaining loan balance in the event of a disability or death.
It is important to note that if you receive a TPD discharge, there may be some implications for your future federal student loan applications and tax obligations. For instance, if you apply for a new student loan within three years of your discharge, you may have to resume payments on the discharged loan before receiving the new loan. Furthermore, starting in 2025, discharged student loan balances will be taxed by the federal government as income, and some states may also tax the discharged amount as income.
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Applying for loan discharge
If you have federal student loans, you may be eligible to have your loans canceled through a "total and permanent disability" (TPD) discharge if you become disabled. To be eligible for a TPD discharge, you must have a severe, long-term disability that leaves you unable to perform any "substantial gainful activity", i.e., work involving significant physical and/or mental activities. Your impairment must be medically determinable and certified by a doctor or licensed health care provider.
If you believe you qualify for a TPD discharge but haven’t received an automatic discharge letter, you can submit an application digitally or by printing a paper application. To submit an application digitally, visit the TPD Discharge Application page, log in to your StudentAid.gov account, and follow the instructions provided. You can also print a prefilled TPD discharge application generated by the online application, manually sign it, and have your authorized medical professional manually sign it if applicable. You can then upload your manually signed application in the “My Activity” section of your StudentAid.gov account.
If you prefer to submit a paper application, you can download a blank TPD discharge application to fill out and submit manually. You will need to mail your completed and signed application, along with any supporting documents, to the following address:
U.S. Department of Education
P.O. Box 300010
Greenville, TX 75403
Alternatively, you can fax your application and supporting documents to 540-212-2415. A caregiver or representative can also apply on your behalf by completing an Applicant Representative Designation (ARD) form. The ARD form can be uploaded through the “Document Upload Tool” in the “My Activity” section of your StudentAid.gov account.
Please note that there will be a pause in the processing of discharges for Total and Permanent Disability (TPD) beginning December 20, 2024, as systems are updated and streamlined. You can continue to submit your TPD forms during this time, but some borrower discharges may not be finalized until the update is complete in Spring 2025.
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Loan forgiveness for disabled veterans
If you have a disability that severely limits your ability to work now and in the future, you may not have to pay your student loan. To qualify for a Total and Permanent Disability (TPD) discharge, you must be unable to do any "substantial gainful activity", i.e., work involving significant physical and/or mental activities. Your doctor or licensed healthcare provider must submit a certification confirming this.
If you receive disability benefits from the Social Security Administration (SSA) or the Department of Veterans Affairs (VA), you may not need to submit any additional paperwork. The VA will identify people who qualify for TPD discharge, and you will be sent a letter if you are eligible.
Veterans who receive a TPD loan discharge due to being totally disabled do not have any monitoring period. Their TPD discharges are permanent and immediate.
It is important to note that if you receive a discharge, you may face challenges in obtaining federal student loans in the future. Additionally, starting in 2025, discharged student loan balances will be taxed by the federal government as income unless Congress renews the tax provision that provided relief.
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Future federal student loan applications
If you have federal student loans and become disabled, you may be eligible to have your loans canceled through a "total and permanent disability" (TPD) discharge. To be eligible for a TPD discharge, your disability must be severe and long-term, and you must be unable to do any "substantial gainful activity," such as work involving significant physical or mental activities.
To apply for a TPD discharge, you can submit an application to the Department of Education, either online, by mail, or by email. You will need to submit one application for all of your federal student loans, and each application must be submitted to the loan holder. If you notify the Department of your plan to apply for a disability discharge, they will instruct your loan holders to suspend collection activity for up to 120 days, giving you time to complete your application.
It is important to note that, even if you receive a discharge, there may be challenges in obtaining federal student loans in the future. For instance, if you request a new student loan or TEACH grant within three years of your discharge, you will have to resume payments on the discharged loan before receiving the new loan. Additionally, starting in 2025, discharged student loan balances will be taxed by the federal government as income unless Congress renews the tax provision that previously provided this relief.
Furthermore, before the COVID-19 pandemic, the Department of Education implemented a three-year monitoring period during which your earnings had to be reported. If you earned above a certain income threshold during the three years after your discharge (excluding disability payments), your discharge could be revoked, and your loan repayment obligation reinstated.
If you borrowed from a private lender, your access to loan forgiveness may be more limited, even in cases of disability. However, some private lenders may forgive the remaining loan balance in the event of a disability or death.
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Taxing discharged loans
If you have federal student loans, you may be eligible to have your loans canceled through a "total and permanent disability" (TPD) discharge if you become disabled. A discharge means that you don't have to repay the loans. To be eligible for a TPD discharge, you must have a severe, long-term disability. Specifically, you must be unable to do any "substantial gainful activity," which is work involving significant physical and/or mental activities due to a "medically determinable" physical or mental impairment.
Veterans who received a TPD loan discharge due to being totally disabled do not have any type of monitoring period. Their TPD discharges are permanent immediately. Direct PLUS loans, informally known as "Parent PLUS" loans, are made by the Department of Education to parents who are paying for their children's college education. Parents with PLUS loans can get discharges for their own disabilities but not their children's disabilities. In addition, when both parents take out a parent PLUS loan, both must become disabled for the loan obligation to be discharged.
Last year, the Department of Education added several new categories of disability recipients who qualify for an automatic discharge. Now, you're eligible for a discharge if any of the following are true: Your next continuing disability review (CDR) has been scheduled for three years (your group is "Medical Improvement Possible"); you've been receiving SSDI or SSI (for disability) for five years or more; your disability onset date (for SSDI or SSI) was five years ago or earlier; or you were approved for disability benefits due to a Compassionate Allowance.
If you get a discharge, you'll have to jump through a few hoops to get federal student loans in the future. If you request a new student loan or TEACH grant within three years of your discharge, you'll have to resume payments on the discharged loan before receiving the new loan. Starting in 2025, student loan balances that are discharged will be taxed by the federal government as income unless Congress renews the tax provision that provided this tax relief. Additionally, a few states, including California, will tax the amount of discharged loans as income. Before the COVID-19 pandemic, the Department of Education had a three-year monitoring period during which you had to report your earnings. If you earned over a certain amount during the three years after your discharge (not counting disability payments), your discharge could be revoked, and your obligation to repay the loan could be reinstated. This post-discharge monitoring period has changed so that you don't have to report earnings, and you won't lose the discharge if you do some work. However, the three-year monitoring period still exists for people who received a discharge through their Social Security records or a doctor's certificate.
Student loan forgiveness can be a lifesaver for some, but it may come with tax liabilities. For those on income-driven repayment plans, loan forgiveness may be interpreted as income by the IRS. To understand the real value of your student loan forgiveness, it's important to understand its potential tax implications. If your student loan debt is forgiven, the forgiven amount might be considered taxable income, leading to a potential tax liability. Borrowers on income-driven repayment plans should be aware that forgiven loans are reported as income unless they're part of qualifying federal forgiveness programs. Thankfully, lawmakers may have ways to protect borrowers who cannot afford this tax bill.
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Frequently asked questions
If you have federal student loans and are permanently disabled, you may be eligible for a Total and Permanent Disability (TPD) discharge, meaning you won't have to repay your loans.
According to the Department of Education, you must be "totally and permanently disabled", meaning you are unable to do any "substantial gainful activity" due to a "medically determinable" physical or mental impairment.
If you are receiving SSDI or SSI benefits, you can apply for a TPD discharge. You will need a doctor or licensed healthcare provider to certify that you are totally and permanently disabled. You can submit an application to the Department of Education online, by mail, or by email.
Yes, there can be. If you request a new federal student loan or TEACH grant within three years of your discharge, you will have to resume payments on the discharged loan before receiving the new loan. Additionally, starting in 2025, discharged student loan balances will be taxed by the federal government as income.
