Do 100 Disabled Veterans Get Student Loan Forgiveness?

Federal student loan forgiveness is available for individuals with disabilities through the Total and Permanent Disability (TPD) discharge. This discharge eliminates the obligation to repay certain federal student loans for those unable to earn an income due to a severe, long-term disability. Veterans with a 100% disability rating from the Department of Veterans Affairs (VA) are a primary group who may qualify.

Understanding Total and Permanent Disability (TPD) Discharge Eligibility

Total and Permanent Disability (TPD) discharge allows federal student loans to be forgiven for individuals with severe, long-term disabilities. The Department of Education grants this discharge when a borrower cannot engage in substantial gainful activity due to a physical or mental impairment that is expected to last for a continuous period of at least 60 months, result in death, or has lasted for a continuous period of at least 60 months.

There are three primary ways to qualify for a TPD discharge. The first pathway involves documentation from the Department of Veterans Affairs (VA). Veterans with a 100% Permanent and Total (P&T) disability rating from the VA, or those considered totally disabled based on an individual unemployability rating, automatically qualify. This rating signifies severe, totally disabling service-connected conditions not expected to improve. The VA often shares data with the Department of Education, initiating automatic discharge; borrowers can also apply directly.

The second pathway to TPD discharge is through documentation from the Social Security Administration (SSA). Individuals receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits may qualify if their SSA notice of award states their next scheduled disability review is five to seven years or more from their last SSA disability determination. This indicates a long-term disability.

The third pathway requires certification from a licensed physician. A licensed medical professional can certify that a borrower is unable to engage in substantial gainful activity due to a physical or mental impairment. This impairment must be expected to result in death, have lasted for at least 60 months, or be expected to last for at least 60 months. This certification provides medical evidence to support the TPD discharge application.

Identifying Eligible Student Loans

The TPD discharge program applies to federal student loans, including those made under the William D. Ford Federal Direct Loan (Direct Loan) Program, such as Stafford Loans, PLUS Loans, and Direct Consolidation Loans.

Federal Family Education Loan (FFEL) Program loans, which ended in 2010, and Federal Perkins Loans are also eligible for TPD discharge.

This federal discharge program does not apply to private student loans. Private loans are offered by banks, credit unions, and other private lenders, and their terms for disability-related relief differ significantly from federal programs. Borrowers with private loans must explore options directly with their loan servicer or lender.

Preparing Your TPD Discharge Application

To prepare your TPD discharge application, gather specific information and documentation. Visit the official Nelnet TPD Discharge website or contact them directly, as Nelnet manages the TPD discharge process for the Department of Education.

For veterans pursuing the VA pathway, the primary document is an official letter from the Department of Veterans Affairs confirming a 100% Permanent and Total (P&T) disability rating. This letter serves as conclusive proof of eligibility and simplifies the application process. Veterans can obtain this letter by contacting the VA directly to request their benefit summary or rating decision letter. Ensuring this letter clearly states the 100% P&T designation is crucial for a smooth application.

Once you have the necessary documentation, download the TPD discharge application form from the Nelnet TPD Discharge website. The form requires personal information, federal student loan details, and selection of your qualifying pathway. Veterans indicate they are applying based on a VA disability determination and provide relevant information from their official VA letter.

Review all sections of the application form for accuracy and completeness. Fill out all required informational fields correctly, including accurate contact information and loan details, to prevent processing delays. Make copies of all documents submitted for your records.

Submitting Your TPD Discharge Application

After preparing your TPD discharge application and gathering all supporting documents, submit the complete package. You have several options for submission.

The most convenient method is to submit the application online through the Nelnet TPD Discharge website. This online portal allows you to upload scanned copies of your completed application form and supporting documentation directly. The online submission provides immediate confirmation of receipt.

Alternatively, submit your application via mail or fax. The Nelnet TPD Discharge website provides the mailing address and fax number. If mailing, use a method that provides tracking and delivery confirmation, such as certified mail, to ensure your documents arrive safely. Faxing also offers a record of transmission.

Upon receipt of your application, Nelnet will place your eligible federal student loans into an automatic forbearance or stop collection activities. You will not be required to make payments on these loans while your TPD discharge application is under review. Nelnet will send a communication confirming receipt and detailing the next steps in the review process.

Post-Discharge Requirements and Considerations

Once a TPD discharge is granted, certain requirements and considerations apply, particularly during a three-year post-discharge monitoring period. For veterans whose discharge is based on a 100% Permanent and Total (P&T) VA disability rating, this monitoring period is generally waived, providing immediate finality to the discharge and removing ongoing reporting obligations.

For individuals whose TPD discharge is not based on a VA 100% P&T rating, a monitoring period ensures ongoing eligibility. During this three-year period, the Department of Education monitors the borrower’s earnings. If annual employment earnings exceed the poverty guideline for a family of two in their state, discharged loans may be reinstated. Borrowers must provide annual certification of earnings; failure to do so can also lead to reinstatement.

Under the American Rescue Plan Act of 2021, TPD discharges are federally tax-free from January 1, 2021, through December 31, 2025. This means the discharged loan amount is not considered taxable income by the IRS during this period. However, some individual states may still consider the discharged amount as taxable income.

Receiving a TPD discharge can affect future federal student aid eligibility. A borrower generally cannot receive new federal student aid unless a physician certifies they can engage in substantial gainful activity. They must also sign a statement acknowledging that new loans cannot be discharged in the future based on any present disability.