What is Disability Discharge?
Total and Permanent Disability discharge is a type of student loan and service obligation forgiveness offered by the U.S. federal government. It is only applicable to federal student loans and TEACH Grant service obligations.
Student Loans That Qualify for Disability Discharge
The following loan types are the only ones that qualify for forgiveness with a TPD discharge:
- William D. Ford Federal Direct Loan (Direct Loan)
- Federal Family Education Loan (FFEL)
- Federal Perkins Loan (Perkins Loan)
Disability Discharge and TEACH Grant Service Obligation
If you have a service obligation from a TEACH Grant, this may also be discharged if you qualify for Total and Permanent Disability with the U.S. Department of Education.
Who Qualifies for Disability Discharge
To have your student loans or TEACH Grant obligation discharged due to total and permanent disability, you must be able to prove your disability to the Department of Education.
For the purposes of TPD discharge, total and permanent disability is generally defined as follows:
A medically determinable physical or mental impairment that prevents you from engaging in substantial gainful activity and that
- Can be expected to result in death;
- Can be expected to last for a continuous period of 60 months or longer; or
- Has lasted for a continuous period of 60 months or longer.
Check Your Eligibility For Disability Discharge
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Applying for Total and Permanent Disability Discharge
To apply for TPD discharge, you’ll need to follow the following three steps: starting an application, showing total and permanent disability in one of three ways, and submitting your application with supporting documents.
Step 1: Start An Application
There are three different ways to start and complete your TPD discharge application:
- Start An Application Online
The Disability Discharge website allows you to start your TPD application online, making it easier to complete some of the sections.
To start your TPD application online, click here.
- Print a Blank Application
You may also choose to start your application from scratch with a blank application.
To download and/or print a blank TPD discharge application, click here.
- Request An Application By Phone Or Email
If you don’t have access to a printer, you can also request a paper application by phone or email.
Phone: 888-303-7818
Office Hours:Monday – Friday 8:00 AM – 8:00 PM (ET)
Saturday 8:00 AM – 7:00 PM (ET)
Sunday Closed
Email: DisabilityInformation@Nelnet.net
Step 2: Show Total and Permanent Disability
The next part of the application process depends on how you plan to show permanent and total disability. You have three options for submitting your application and showing that you meet the qualifications:
- Physician Certification
You can submit a certification from your physician confirming that you are totally and permanently disabled. Your physician must be able to certify that you’re unable to engage in substantial gainful activity due to a medically determinable physical or mental disability that can be expected to result in death, can be expected to last longer than 60 months, or has lasted longer than 60 months.
- Veterans Affairs
Veterans can submit documentation from the U.S. Department of Veteran Affairs showing the VA’s determination that you’re unable to gain employment due to a service-related disability.
- Social Security Award
You can submit a Social Security Administration (SSA) notice of award for SSDI or SSI benefits. The notice must state that your next scheduled disability review will take place within five to seven years from your most recent disability determination.
Step 3: Complete Remaining Sections and Submit Your Application
Whether you started your application online or started with a blank application, you’ll need to print your application to complete Section 3 or Section 4 (depending on the method you choose to show total and permanent disability).
Each option for showing total and permanent disability has different specific requirements and materials you must submit along with your application for TPD discharge:
- Physician Certification
If you plan to apply for TPD discharge using a doctor certification, you’ll need to take the following steps:
- Complete the first three sections of the TPD discharge application.
- Have a licensed M.D. or D.O. physician completed Section 4 of the application for you.
- Submit the application within 90 days of the date your physician signed the application.
- Veteran’s Affairs
If you plan to apply for TPD discharge using Veterans Affairs certification, you’ll need to take the following steps:
- Complete the first three sections of the TPD discharge application.
- Submit the application along with the documentation of your VA determination.
- Social Security Award
If you plan to apply for TPD discharge using your Social Security Award notice, you need to take the following steps:
- Complete the first three sections of the TPD discharge application.
- Submit the application along with a complete copy of your SSA notice of award or Benefits Planning Query
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Things To Know When Applying For Disability Discharge
There are a few things you need to know both prior to applying for disability discharge, and after applying.
A Representative Can Help You Apply
A representative can complete and submit your Total and Permanent Disability discharge application on your behalf if you are unable to do so. First, your representative must complete an Applicant Representative Designation form (even if they have power of attorney).
What Happens When You Apply?
Once your application is received, the Department of Education will contact your lenders or the holder of your TEACH Grant obligation and stop collection activity until a determination has been made. A determination usually takes between three and five months, depending on the complexity of your case.
If any of the loans you want to have discharged are in default and are currently being paid with wage garnishment or Treasury Offset, the garnishment or offset will continue during the determination process.
After a determination has been made based on the information and supporting documentation you submitted, you will receive a final approval or denial of your application by mail.
If You’re Approved
If your application for TPD discharge is approved, the Department of Education will contact your lenders or the holder of your TEACH Grant service obligation with discharge instructions.
The Department will also instruct your lenders to refund any payments you made on your student loan balance after the point which you became totally and permanently disabled.
After the discharge of your student loans or service obligation, you will need to meet certain requirements during a three-year post-approval monitoring period (see below). If you fail to meet these requirements, your loans or service obligation will be reinstated.
If You’re Denied
If your application for TPD discharge is denied, your lenders or the holder of your TEACH Grant service obligation will be instructed to continue collecting as usual. You will receive a letter by mail informing you of the denial and the reason for the denial, as well as information on what to do if you disagree with the decision or have questions.
Stipulations If You’re Approved for Disability Discharge
If you’re considering applying for Total and Permanent Disability discharge, it’s important to understanding the following stipulations:
- Three-Year Post-Discharge Monitoring Period
As mentioned above, if you’re approved for TPD discharge, you will be subject to a three-year monitoring period. The Department of Education will monitor your financial activity during this period of time and is entitled to reinstate your loans or service obligation under any of the following circumstances:
- Your annual earnings from employment exceed the Poverty Guideline for a family of two in your state (regardless of your household size);
- You receive an SSA notice that you’re no longer considered totally and permanently disabled or that your disability review will no longer be in the five- to seven-year review period;
- You receive a disbursement of a Direct Loan, Perkins Loan, or TEACH Grant that was received before the discharge date, and you do not return the disbursement in full within 120 days; or
- You receive a new Direct Loan, Perkins Loan, or TEACH Grant.
You must also notify the Department of Education if during the three-year monitoring period you:
- Exceed the Poverty Guideline for a family of two in your state from employment earnings;
- Change your address or phone number;
- Are requested to provide documentation of your annual earnings; or
- Receive a notice from the SSA that you’re no longer totally and permanently disabled or that your disability review will no longer be in the five- to seven-year review period.
If you do not meet the requirements during the three-year monitoring period and your loans or service obligations are reinstated, you will receive a letter by mail that includes an explanation of why your TPD discharge was revoked, when your first payment is due on the reinstated loans, and how you can contact the Department of Education if you have questions or disagree with the decision.
- Ineligibility for New Loans and TEACH Grants
If you’re approved for Total and Permanent Disability discharge, you will not be able to apply for new student loans unless you obtain a letter from a physician that you are able to engage in substantial gainful activity, and you sign a statement agreeing that your new student loans cannot be discharged again based on any illness you had prior to taking out the new loans. Any new condition that renders you disabled would allow you to reapply for disability discharge.
Beginning in 2018, if you’re approved for TPD discharge, any remaining balance on your student loans that is forgiven, as well as any balance that’s refunded to you from previously made payments, will not be charged as taxable income by the IRS for that year.
This was a big change made by the Trump administration with the 2018 Tax Cuts & Jobs Act. Previous to this borrowers would have to pay taxes on the discharged loan amount.
Forgiveness and Discharge Alternatives
If you’re unable to work due to total and permanent disability, TPD discharge isn’t your only option for federal student loan discharge.
The U.S. Department of Education offers income-driven repayment (IDR) plans to help those who are struggling to make the monthly payments on their federal student loans. Income-Based Repayment (IBR) is the most common of these, but you may also be eligible for Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), or Income-Contingent Repayment (ICR).
Each income-driven repayment option has different qualification requirements and repayment plans, but the purpose of each is to base your monthly payment on what you currently earn in discretionary income, rather than what you owe. If your student loan bills are high, and your income is low, an IDR plan may be a valid alternative to TPD discharge.
Learn More About Disability Discharge
Total and Permanent Disability discharge may be the best way for you to get out of student loan debt when you’re unable to work due to a mental or physical impairment. If you have questions or need help applying for TPD Discharge, call us at 1-844-669-4407
