What Disabilities Qualify for Student Loan Forgiveness?
Understand the defined criteria and systematic process for obtaining student loan discharge based on total and permanent disability.
Student loan forgiveness for individuals facing significant health challenges offers a pathway to financial relief. This program, known as Total and Permanent Disability (TPD) discharge, allows eligible borrowers to eliminate their federal student loan obligations. It provides a means for those unable to maintain substantial gainful employment due to a long-term disability to manage their finances without the burden of student debt.
Defining Total and Permanent Disability (TPD)
Total and Permanent Disability (TPD) for student loan discharge refers to a condition preventing a borrower from engaging in any substantial gainful activity due to a physical or mental impairment. This impairment must be expected to result in death, have lasted for a continuous period of at least 60 months, or be expected to last for at least 60 months. Substantial gainful activity is performing significant physical or mental activities for pay or profit.
Borrowers can demonstrate TPD through one of three pathways. The first involves certification from the U.S. Department of Veterans Affairs (VA). This applies to veterans with one or more service-connected disabilities that are 100% disabling, or those determined to be totally disabled based on an individual unemployability rating.
The second pathway relies on documentation from the Social Security Administration (SSA). Borrowers qualify if they receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, and their next scheduled disability review is set for five to seven years or more from their last SSA disability determination.
The third pathway requires certification from a licensed medical professional, such as an M.D., D.O., Nurse Practitioner (NP), Physician Assistant (PA), or certified psychologist. This professional must attest that the borrower is unable to engage in any substantial gainful activity due to a physical or mental impairment.
Eligible Loans and Application Requirements
Several types of federal student loans are eligible for Total and Permanent Disability (TPD) discharge. These include William D. Ford Federal Direct Loan (Direct Loan) Program loans, Federal Family Education Loan (FFEL) Program loans, and Federal Perkins Loans. A TPD discharge can also relieve a borrower of a Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligation.
Borrowers must gather specific documentation corresponding to their chosen TPD pathway. For veterans, a letter from the VA confirming a 100% service-connected disability or individual unemployability is necessary. Borrowers qualifying through SSA benefits need to provide a copy of their SSA notice of award or a Benefits Planning Query (BPQY) indicating their eligibility and review schedule.
For physician certification, the medical professional must complete a specific section of the TPD discharge application form, confirming the nature and expected duration of the impairment. This form can be obtained from the Federal Student Aid website or by contacting Nelnet, the servicer for TPD discharge applications.
The Application and Discharge Process
Once all necessary documentation is prepared, borrowers can submit their Total and Permanent Disability (TPD) discharge application. The application can be submitted online through the official DisabilityDischarge.com portal, or by printing and mailing their completed form. Borrowers also have the option to fax or email their application and supporting documents.
Nelnet serves as the federal loan servicer managing the TPD discharge program for the U.S. Department of Education. After the application is received, Nelnet temporarily suspends payments on the borrower’s federal student loans for typically 120 days for review. During this process, the Department of Education or its servicer may request additional information.
The Department of Education also has a data-matching program with the VA and SSA, which can lead to automatic TPD discharge for some eligible borrowers. If identified, borrowers receive a letter notifying them of their eligibility and impending discharge, unless they opt out. Upon approval, the borrower receives notification that their loans have been discharged. Payments made on or after the effective disability determination date may be refunded.
Post-Discharge Obligations and Reinstatement
After receiving a Total and Permanent Disability (TPD) discharge, a monitoring period previously applied to borrowers whose TPD was based on SSA documentation or a physician’s certification. This three-year period required borrowers to submit annual income information and avoid earning above the poverty guideline for a family of two. However, effective July 1, 2023, the U.S. Department of Education eliminated this income monitoring requirement.
Despite this elimination, certain conditions can still lead to the reinstatement of discharged loans. If a borrower receives a new federal student loan or TEACH Grant during the three-year period following their TPD discharge, the previously discharged loans or TEACH Grant service obligation may be reinstated. This includes taking out Parent PLUS Loans for a child’s education.
Additionally, if the Social Security Administration notifies the Department of Education that the borrower is no longer considered totally and permanently disabled, or their disability review no longer meets the required review period, the discharged loans can be reinstated. For TPD discharges based on VA documentation, the three-year post-discharge monitoring period generally does not apply.