What Disabilities Qualify for Student Loan Forgiveness?

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If you have a complete and total disability, you may not be liable for repaying certain types of federal student loans. This is based on eligibility for the Total and Permanent Disability (TPD) Discharge Program, which is offered through the United States Department of Education and overseen by student loan servicer Nelnet.

You need to meet specific disability requirements to qualify for loan forgiveness through this program, and there are three main ways you can get approved. If you are experiencing a total disability and you struggle to repay federal student loans as a result, read on to find out which programs provide relief and how to apply.

Key Takeaways

• The Total and Permanent Disability (TPD) Discharge Program is facilitated by the U.S. Department of Education and overseen by Nelnet.
• Applicants for the program can apply through the U.S. Department of Veterans Affairs, the Social Security Administration (SSA), or an eligible medical professional.
• Qualification requirements for the Total and Permanent Disability (TPD) Discharge Program vary based on the path you take to apply (through the Department of Veterans Affairs, the SSA, or a medical professional).

What Is the Total and Permanent Disability (TPD) Discharge Program?

The Total and Permanent Disability (TPD) Discharge Program is for student loan borrowers who are totally disabled and unable to work as a result. This student loan forgiveness program aims to relieve eligible individuals of their federal student loan debt obligations based on their inability to repay.

TPD discharge can apply to federal student loans that fall under the William D. Ford Federal Direct Loan Program, the Federal Family Education Loan (FFEL) Program, and the Federal Perkins Loan Program. The Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligations can also qualify.

Applicants need to prove they are totally and permanently disabled to qualify for student loan forgiveness. They can do this by providing supporting information through the U.S. Department of Veterans Affairs, the Social Security Administration (SSA), or an eligible medical professional.

To apply for this program, the U.S. Department of Education recommends you do any of the following:

• Use the online application wizard to auto-fill parts of your application.
• Print out the application form and complete it by hand.
• Request that an application be mailed to you by emailing DisabilityInformation@Nelnet.net or calling 1-888-303-7818.

Once the application is complete, you can mail it to:

U.S. Department of Education – TPD Servicing
P.O. Box 87130
Lincoln, NE 68501-7130

List of Disabilities That Qualify for Student Loan Forgiveness

The U.S. Department of Education doesn’t have a list of specific disabilities that can qualify you for total loan forgiveness of your student loans through the TPD Discharge Program. However, you must be totally and permanently disabled, meaning you’d be unable to work and repay student loan obligations.

While the factors used to determine total and permanent disability can be subjective and based on the personal opinion of a medical professional, the Education Department gives physicians ways to quantify total disability for other purposes.

Specifically, a person is permanently and totally disabled if the following applies:

• The person cannot “engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment.”
• The impairment “can be expected to result in death.”
• The disability has lasted for a continuous period of no less than 60 months or can be expected to last for a continuous period of at least 60 months.

Documentation Required and Proof of Disability

The steps you’ll take to prove total and permanent disability depend on the avenue you plan to take to apply for the TPD Discharge Program. Here’s a rundown of what’s required to apply through the Veterans Affairs Department, the SSA, or an eligible medical professional.

U.S. Department of Veterans Affairs

You can receive student loan discharge through the TPD Discharge Program directly through the Veterans Affairs Department as a military veteran. In this case, you can have your federal student loans discharged if one of the following applies:

• You have a service-connected disability that is 100% disabling.
• You are totally disabled based on an individual unemployability rating.

You may receive a letter automatically if you qualify for loan discharge based on an eligible disability. You can also apply for the program and provide documentation that shows the Veterans Affairs Department awarded you the disability determination.

Social Security Administration (SSA)

You may also be eligible for student loan discharge through this program if you’re already eligible for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits. One of the following must be true to become eligible this way:

• Your next continuing disability review is scheduled within five to seven years from your last SSA disability determination.
• Your next continuing disability review is scheduled for three years from now.
• You have a “medical onset date” (i.e., the date your disability began) for SSDI or SSI of at least five years.
• You may be eligible to qualify for SSDI or SSI based on a compassionate allowance.
• You’re currently receiving SSA retirement benefits and met one of the above requirements immediately before qualifying for retirement benefits.

You may receive a letter automatically if you qualify for loan discharge based on an eligible disability. You can also apply for the program and provide documentation that proves your disability, including one of the following:

• Copy of your SSA Notice of Award 
• SSA Benefits Planning Query

Medical Professional

You can also apply for TPD discharge by having a medical professional certify that you have a total and permanent disability. However, not all medical professionals can make this determination. It must come from one of the following:

• Doctor of medicine (MD)
• Doctor of osteopathy/osteopathic medicine (DO)
• Nurse practitioner (NP)
• Physician’s assistant (PA)
• Certified psychologist at the independent practice level

The medical professional must be certified to practice in the United States, and they must provide you with documentation that shows you are “unable to engage in any substantial gainful activity.” Documentation must also show that your inability to work is based on a 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 at least 60 months

Other Programs and Options for Borrowers With Disabilities

Having student loans forgiven through a TPD discharge can help disabled individuals move on with their lives without the stress of having to repay student loan debt. However, there are a few other programs that can help in this respect.

Teacher Education Assistance for College and Higher Education (TEACH) Grant

The TEACH Grant is a higher education grant that promises funding for college if you agree to complete a teaching service obligation. This grant is worth up to $4,000 a year for students who are planning to begin a teaching career after graduation.

Under normal circumstances, the grant is turned into a loan that must be repaid if the student doesn’t complete the teaching service obligation required for the funding. However, individuals who become totally and permanently disabled can have the teaching service obligation canceled under this program. This means students can attend college, receive the grant, and enter any other field of work (or not work at all) without having to repay the funds provided they can prove disabled status.

Saving on a Valuable Education (SAVE) Plan

The Saving on a Valuable Education (SAVE) Plan is an income-driven repayment (IDR) plan worth considering if you apply for a TPD discharge and can’t get approved. After all, this program lets borrowers repay their loans over 20 to 25 years before having their remaining loan balances forgiven. Individuals who borrowed less than $12,000 for higher education can also have their loans forgiven in as little as 10 years. Payments are based on income and family size and are 5% of discretionary income for undergraduate student loans and 10% of discretionary income for graduate school loans.

The benefit for disabled borrowers is the increased income threshold for individuals to qualify for a $0 monthly payment under the plan. Essentially, your monthly payment is based on the difference between your adjusted gross income (AGI) and 225% of the U.S. federal poverty limit.

For example, 225% of the federal poverty limit in most states works out to $32,800. This means individuals who earn less than $32,800 and don’t have any dependents would have a monthly payment of $0. However, earning thresholds are higher based on family size or whether you have a spouse, dependents, or both. A family of four with an annual income of $67,500 or less would also qualify for a $0 monthly payment on federal student loans.

Can My Student Loans Be Forgiven if My Spouse Is Disabled?

You cannot have your personal loans forgiven through the Total and Permanent Disability (TPD) Discharge Program if your spouse is disabled. However, your spouse may qualify for discharge of their own student loans through the program.

Can You Get Student Loans While on Disability?

Eligibility for federal student loans is not impacted by partial or total disability. You can apply for federal student loans by filling out the Free Application for Federal Student Loans (FAFSA).

How Does Student Loan Forgiveness Impact My Credit Score?

Having student loans forgiven may cause your credit score to drop slightly, but only because removing student loans from your credit profile could impact your credit mix. This factor makes up 10% of FICO scores, and individuals score better when they have more types of loans versus fewer. Outside of that, having student loans forgiven shouldn’t negatively impact your credit score.

The Bottom Line

The TPD Discharge Program can provide essential relief from student loan debt if you cannot work due to a physical or mental impairment that has left you totally disabled. However, you may encounter some challenges in getting approved for the program, including the requirement to supply documentation that proves you cannot work.

Read the original article on Investopedia.