In August 2023, the U.S. Department of Education announced which more than 323,000 federal student loan borrowers qualified for complete student loan forgiveness because of total and permanent disability. The brand new regulation will forgive a lot more than $5.8 billion in student loan debt. Here's what you should know about the program, whether you may qualify and what your options are.
What Is Total and Permanent Disability Loan Forgiveness?
The total and permanent disability (TPD) discharge program provides complete forgiveness for eligible education loan borrowers with direct loans, Federal Family Education Loans (FFELs) and federal Perkins loans.
Additionally, if you received a TEACH Grant, you might qualify to be exempt from the program's service obligation. There are 3 ways you are able to be eligible for a TPD forgiveness.
Physician's Certification
You can entitled to the program by having a physician—either an M.D. or a D.O. licensed to practice in the U.S.—certify that you are not able to participate in “substantial gainful activity” due to mental or physical impairment that fits one of three requirements:
- It's likely to result in death
- It has lasted for a continuous duration of 5 years or more
- It's expected to last for a continuous period of 5 years or more
The Department of Education defines substantial gainful activity like a degree of work which involves significant mental or physical activities, or a combination of both.
U.S. Department of Veterans Affairs Documentation
If you're a veteran, you are able to qualify by giving documentation in the Department of Veterans Affairs (VA) showing that you've a service-connected disability that's 100% disabling or that you are totally disabled based on a VA individual unemployability rating.
Social Security Administration Documentation
If you're eligible for Social Security Disability Insurance or Supplemental Security income, you are able to be eligible for a TPD forgiveness by providing documentation from the Social Security Administration (SSA) that the next scheduled disability review is 5 to 7 years or even more from your last disability determination.
How to try to get Total and Permanent Disability Loan Discharge
The Department of Education proactively works to identify education loan borrowers who qualify based on VA or SSA criteria, so there's generally no application necessary for people who meet those qualifications.
If you're found to be eligible, the Department of Education should send instructions to notify you and also give a date through which you can tell the company you don't want the discharge. If you do not respond, your loans will be automatically forgiven.
If you haven't received such a letter and believe you qualify or if you you might be eligible based on a physician's certification, you are able to submit an application together with your documentation to Nelnet, the servicer that handles TPD cancellations, through the TPD discharge website.
You can also apply by phone or email if you like. If this is the situation, payment requirements on your federal loans will pause for 4 months, so you have time to submit any supporting documents.
If your disability makes it which means you can't apply on your own, someone can help you. Before they apply on your behalf, though, you and your representative will have to complete an applicant representative designation form, which you can download in the TPD Discharge website.
Once your application is submitted, Nelnet will explain the review process. You will not be asked to make monthly payments as the application is being reviewed.
How Do I Determine if My Loans Happen to be Forgiven?
If the Department of Education determines that you simply be eligible for a a TPD discharge, you'll receive a notification that your loans have been forgiven or your TEACH Grant service obligation need not be completed. You'll also receive a refund associated with a loan repayments you made on or after the effective date of your disability certification.
If you qualify due to SSA documentation or a physician's certification, note that you'll be susceptible to a three-year monitoring period. If you don't meet certain conditions at any time during this period, the loan or grant service obligation is going to be reinstated.
Reinstatement can happen if any of the following happens during the three-year period:
- Your annual earnings from employment exceed the poverty guideline amount for a family of two where you live.
- You receive a new federal education loan underneath the direct loan program or perhaps a new TEACH Grant.
- You get another disbursement from the direct loan or TEACH Grant that was first disbursed before your discharge, and also you don't give it back within 120 days.
- The SSA notifies the Department of Education that you're no more disabled or that your next scheduled disability review won't be five to seven years out of your last determination.
What if I'm Disabled try not to Qualify for Discharge?
If you don't qualify for a TPD discharge, but you have difficulty checking up on your monthly payments from your disability, there are financial help programs around for other facets of your money that can help make room in your budget:
- Medicare might help cover your medical costs for those who have an eligible disability.
- Medicaid might help cover your medical costs if you have a minimal income.
- The Housing Choice Voucher Program, also known as Section 8, might help pay part of your rent within an approved rental.
- The Housing Choice Voucher Homeownership Program can help cover certain housing expenses.
- The Supplemental Nutrition Assistance Program (SNAP), formerly referred to as Food Stamp Program, can help low-income families with food needs. People with disabilities can qualify for increased SNAP benefits.
You may also get in touch with the nation's Disability Rights Network, Disability Rights Legal Center, National Disability Institute and other nonprofit or charity organizations that can help you get the financial help you need.
Other Options for Paying Student Loans
If you are always having trouble making your monthly payments despite other forms of monetary assistance, you may still find possibilities:
- After the government student loan repayment resumes in February 2023, file a request for additional forbearance or deferment and provide supporting documentation of your financial hardship.
- Apply for an income-driven repayment plan, which reduces your monthly payment to 10% to 20% of the discretionary income. What's more, these programs extend your repayment term to 20 or Twenty five years, after which any remaining balance is forgiven.
- If you're able to work, look into employers that offer student loan repayment assistance programs.
Refinancing has given could potentially help give you some more treatments for your monthly payments and possibly even reduce your interest rate, however, you should consider it only if you don't anticipate needing access to federal benefits like forgiveness and income-driven repayment. Refinancing federal student loans for an account having a private lender will lock you out of trouble of these benefits.
Finally, although it can be difficult to have student education loans discharged in bankruptcy, it is possible in a few instances. If your financial circumstances are dire, consider talking to a personal bankruptcy attorney to understand more about your choices.
Make It important to Avoid Missing Payments
Whether or not you believe you be eligible for a education loan forgiveness, you need to continue to make your monthly obligations on time each month to prevent potential harm to your credit score. Remember that you'll receive all of your payments back should you qualify for forgiveness, once they were created following the effective date of your disability determination.
While you're at it, monitor your credit regularly to make sure no other issues pop up that may threaten the healthiness of your credit.