The Ultimate Guide to Student Loan Disability Discharge

Taking on student loans is a huge commitment. You sign up for them knowing you’ll need to work hard to pay them off — but what if something serious happens and you aren’t able to?

What if you come down with a serious illness, or are involved in an accident that leaves you physically unable to work? If you’re left totally and permanently disabled, you could qualify for student loan forgiveness through the U.S. Department of Education.

However, as you might imagine, this can be a lengthy and complex process. Here’s a complete guide on the process of applying for student loan forgiveness due to a disability.

Total and Permanent Disability (TPD) discharge is a program created by the U.S. Department of Education. It relieves the disabled borrower from having to repay federal student loans or TEACH Grant service obligations.

Nelnet, a student loan servicer, assists the Department of Education with this process. Nelnet manages all of the communications with borrowers on behalf of the Department.

TPD discharge only applies to federal student loans. It relieves debt from the following:

• William D. Ford Federal Direct Loan (Direct Loan)
• Federal Family Education Loan (FFEL)
• Federal Perkins Loan Program loans

In addition to these three federal loans, TPD discharge can also relieve you from having to fulfill a TEACH Grant service obligation. If you have one of these loans and are looking to apply for a TPD discharge, you must first prove you are totally and permanently disabled.

There are three ways you can show you meet the TPD discharge requirements, according to the FederalStudentAid:

1. If you’re a veteran, you can apply for TPD discharge and provide documentation from the VA showing you have a service-connected disability (or disabilities) and are unable to work.
2. If you receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), and your next disability review will be within five to seven years of your most recent one, you may apply for TPD discharge. You can submit paperwork showing your SSA notice of award for SSDI, SSI benefits, or a Benefits Planning Query that states the date of your next review.
3. You can submit a certification from a doctor (an M.D. or D.O.) declaring you’re totally and permanently disabled. The physician must certify you’re unable to work due to 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 not less than 60 months.

Each option for conditions eligible for TPD discharge has its own set of requirements when going through the application process.

The Department of Health has agreements with the Social Security Administration and VA that allow them to determine who qualifies for a TPD discharge. If they think you might qualify, they’ll contact you to let you know next steps. If you’re contacted based on information received from the SSA or VA, you don’t have to provide supporting documents.

If you haven’t been contacted and believe you meet the requirements above, you can fill out the application, attach supporting documents, and mail it in to the Department.

If you’re unable to complete the application on your own, your representative can complete and submit your TPD discharge application on your behalf. With this option, your representative will have to complete an Applicant Representative Designation form. This has to be submitted and processed before they’re able to work with your representative.

There are a few ways you can get the application:

• Start the application online. You can’t fully complete all the required parts online, since you will have to physically send in supporting documents. However, you can get it started online — visit the link here. The Department will use the information you provide to send you a partially completed application in PDF form, which you’ll print and fill out the rest by hand.
• Download and print the application. Instead of filling out the first part of the application online, this option allows you to download and print the entire blank application and fill it all out by hand. You can find the blank application here.
• Request an application by phone or email. With this option, you’ll contact the Department either via phone or email and request an application be mailed to you. The phone number is 888-303-7818 and the email is DisabilityInformation@Nelnet.net.

Regardless of the option you choose to obtain the application, you’ll have to fill out some or all of it by hand.

If you opted to start the application online, you’ll have filled out the first and second sections already. A PDF version of it will be emailed back to you for you to print out and manually complete the third section. If you printed the application yourself or requested one be mailed to you, you’ll manually fill out sections one through three.

Once the application is filled out, you’ll have to attach supporting documents or have a physician fill out the fourth section. The supporting documents for each disability option differ a bit.

Veteran Affairs determination: If you’re a veteran, you must supply documentation from the VA that shows the VA has determined one of the following:

• You have a service-connected disability (or disabilities) that are 100% disabling.
• You are totally disabled based on an individual unemployability determination.

Social Security Administration: If you’re applying as a recipient of SSDI or SSI benefits, your paperwork must be an SSA notice of award for SSDI or SSI benefits. The paperwork must also state your next scheduled disability review will be within five to seven years of your most recent disability determination.

Physician certification: You can submit your application with a certification from a physician that shows you are totally and permanently disabled. After filling out sections one through three of your application, you’ll have a physician (either an M.D. or D.O.) complete section four of your application. It is important to note that with this step you have to mail in the completed application within 90 days of the date your physician signed the application.

After attaching all necessary paperwork to your application, you must mail it in to the Department. The address to mail your application and supporting documents can be found here. You can also fax it, email it, or scan and upload it to the disability discharge website.

After the Department receives your TPD discharge application, they’ll contact the holders of your federal loans or TEACH Grant service obligation and suspend collection on your loans while they determine eligibility. Basically, you won’t have to make any payments on your loans while they look over your application — this period can last up to 120 days.

However, if your loans are in default and your payments are collected through wage garnishments, this will continue until your discharge is approved.

Next, your application and supporting documents will be reviewed to make sure everything is completed. After the review process, the Department will reach a final decision.

Once the U.S. Department of Education approves your discharge request, you’ll be notified of the approval and your loans or TEACH Grant will be transferred to them for discharge. The lenders will also be asked to return any payments you made after the disability date, which is when the Department received your application.

If your TPD discharge was based on Social Security Administration documentation or a physician’s certification (this does not apply for veterans), you will be subject to a three-year, post-discharge monitoring period.

Starting from the date your discharge is approved, the Department will reinstate your obligations to pay back the loans again if one of the following is true:

• Your annual employment income exceeds the poverty guideline amount for a family of two in your state, regardless of your family size.
• You receive a new Federal Direct Loan, Federal Perkins Loan Program Loan, or TEACH Grant.
• A disbursement of your federal loans or TEACH Grant that you received before the discharge date is made, and you can’t ensure the full amount will be returned within 120 days.
• SSA determines you are no longer totally and permanently disabled, or that your next disability review no longer meets the five-to-seven-year review period.

You have a few other responsibilities during this three-year monitoring period. You have to contact the Department if:

• Your annual earnings exceed the poverty guideline amount for a family of two in your state, regardless of your family size.
• Your address or phone number changes.
• The Department requests documentation of your annual earnings from employment.
• You receive notice from the SSA you are no longer permanently and totally disabled, or your disability review doesn’t meet the five-to-seven-year period from your most recent review.

You’ll be notified via mail if your application was denied, and your loan holders will start collecting payments again.

This letter will state why you were denied and what you can do if you have any questions about the decision. If you have additional information you want the department to consider within a year of the denial letter, they will re-evaluate your application.

Thanks to the new tax code that went into effect early this year, the disability discharge of federal student loans is now tax-exempt. Previously, this discharge had to be reported as taxable income and could mean a pretty hefty tax bill when the time came. However, take note — this only applies to discharges during 2018 through 2025.

The U.S. Department of Education’s TPD discharge only applies to federal student loans, but what if your loans are private? While there aren’t any disability loan forgiveness programs for private student loans, some lenders have started offering this service themselves.

Here are a few lenders that offer disability discharge for private student loans with programs similar to the TPD discharge:

• Sallie Mae’s website states they will waive the current balance if a student becomes permanently and totally disabled. There isn’t an online application — you can call them at 800-472-5543 for more information.
• Wells Fargo offers private student loan forgiveness in the event of total and permanent disability. This forgiveness also extends to its Student Loan for Parents loan in the event the student receiving the aid becomes disabled, and the Wells Fargo Private Consolidation loan.
• Discover offers a 12-month forbearance for students suffering from hardships based on a medical disability.

No. If you have federal student loans with multiple lenders, you don’t need to complete more than one application. When you send in your application, the Department contacts the lenders for all of your federal student loans.

If you have any more questions about the TPD discharge program through the Department of Education, refer to their FAQ page.

Jacquelyn Pica is a writer at The Penny Hoarder, a personal finance website that helps you make smart money decisions. Here’s their latest guide to paying off credit card debt. Find her on Twitter @JacquelynTPH.