Closed School Discharge Program
This student loan forgiveness program removes your repayment obligations if your school shuts down while you are enrolled. Your student loans may also be eligible for discharge if your school closes soon after you withdrew from the institution.
A closed school loan discharge is available for Direct Loans, FFEL Program loans, and Perkins Loans. The school secretary usually sends you an application for this program upon closure. You may also contact your loan servicer directly.
Private Student Loans: Disability Discharge
Some private student loans provide a disability discharge that is similar to the TPD Discharge for federal student loans. These lenders include:
Sallie Mae Call 1-800-4-SALLIE
SunTrust Education Loans 1-800-233-0557
- Other private student loan lenders
In addition, several state student loans provide a disability discharge, including state student loans from Georgia, Iowa, Kentucky and Texas.;
Some of the lenders offering a disability discharge on private student loans provide a disability discharge on private student loans that is more generous than the disability discharge standard for federal loans. For example, some of the lenders will discharge private parent loans if the student becomes totally and permanently disabled, not just if the parent borrower becomes disabled.;
Sallie Mae was the first lender to offer a disability discharge on private student loans, starting with the Smart Option student loan in 2009. Other lenders followed their lead within the next few years and started offering disability discharges on new private student loans.;
The borrower may also consider refinancing their student loans to switch to a lender who offers disability discharge, or at least a lower interest rate.;
Total And Permanent Disability Discharge
You can qualify for a Total and Permanent Disability Discharge of your federal student loan debt if you’re 100% disabled.
You have three options to prove that you are totally and permanently disabled:
Nelnet is the loan servicer responsible for administering the TPD process. You can apply for a TPD discharge at disability discharge.com.
Permanent Disability Student Loan Forgiveness For Civilians
Veterans are not the only Americans who can qualify for TPD student loan forgiveness. Civilians can also qualify for TPD status in one of two ways:
The new rules would not make qualification for civilians automatic. A disabled civilian
would still need to file paperwork proving their TPD status to be granted loan forgiveness.
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According to Trumps executive order, only half or 25,000 of the approximately 50,000 totally and permanently disabled veterans who currently qualify for the discharge of their Federal student loan debt have received the benefits provided to them by the Higher Education Act of 1965, as amended.
But why did only 50% of eligible disabled veterans apply for VA student loan forgiveness?
Well, to be frank, the old process was confusing and frustrating, and prevented many disabled veterans from receiving the student loan debt relief for which they were entitled to by law.
The good news is that the new and improved disabled veteran student loan forgiveness program is super easy, intuitive to submit and get approved, and eligible disabled veterans can even apply online at the link below:
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Does Tpd Discharge Affect Taxes
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.
Automatic Discharges For Borrowers With Ssa Disability Designations
Several commenters supported the Department’s implementation of automatic TPD discharges for disabled veterans and asked that the Department also allow for automatic TPD discharges for borrowers who are identified as eligible for a TPD discharge through the existing data match with SSA.
Discussion: We agree. Under §§674.61, 682.402, and 685.213, these borrowers are eligible to receive a loan discharge but are currently required to submit an application before they may receive the discharge. Eliminating the application requirement for borrowers who are identified as eligible for a TPD discharge through the data match with SSA, so they can receive an automatic discharge, is a logical extension of the IFR. The rationale for providing borrowers with a TPD discharge based on a disability determination by VA obtained through a data match, thereby eliminating unnecessary documentation burdens on individuals determined by a government agency to qualify for a TPD discharge, applies equally to individuals who qualify for TPD discharge based on a disability determination by the SSA as obtained through a data match.
Changes: In §§674.61, 682.402, and 685.213, we have provided that a borrower who is identified as eligible for TPD discharge through the data match with SSA does not need to submit a TPD application as a condition of receiving a loan discharge.
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How Is This Different From Current Student Loan Forgiveness Rules
Under current rules, Veterans and civilians who qualify for student loan forgiveness due to a Total and Permanent Disability must file paperwork with their federal student loan servicers in order to have those balances discharged. Veteran advocacy groups have rightly complained that the procedure is too cumbersome for Veterans who suffered a severe disability during their service.
Currently, the White House estimates that there are 50,000 disabled Veterans in the country that are eligible for permanent disability student loan forgiveness. However, only roughly 22,000 Veterans have applied for TPD student loan forgiveness.
Under the new rules, all Veterans who receive TPD status from the VA would automatically be identified by the DoED for student loan forgiveness. The DoED would send them a letter letting them know they are eligible for forgiveness unless they decide to opt-out. If they dont opt-out within 60 days, all federal student loan balances would be forgiven.
What about taxes on the cancelled debt?
Under CFPB regulations established in 2018, borrowers who qualify for permanent disability student loan forgiveness are automatically exempt from paying federal income taxes on the discharged debt. This exemption would still apply to Veterans who qualify for discharge automatically.
Obtain A Tpd Discharge Application
There are a few ways you can get the application:
- Start the application online. You cant 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 youll print and fill out the rest by hand.
- . 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, youll 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.
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What Happens If You’re Approved
Once the U.S. Department of Education approves your discharge request, youll 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 physicians certification , 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 cant 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:
Applying For Disability Discharge
You should let Nelnet, the Department of Educations contractor, know that you want to apply.You can do this by phone or email.; You can call seven days a week at 888-303-7818 or email at .; You can also let Nelnet know you are applying by using the online disability discharge application.; You can designate a representative to apply on your behalf.; You must fill out the representation designation form available in English and Spanish on the Departments disability discharge web site.
Once you let Nelnet know you are applying, they are supposed to do the following:
1.; Provide you with information you need to apply for a discharge if you do not already have it.
2.; Identify your federal student loans and/or TEACH Grant service obligation that may qualify for a discharge.
3.; Contact your loan holders and instruct them to suspend collection activity on your loans for a period of up to 120 days.; This means that during the 120 day period, you will not be required to make payments on your loans.; This gives you time to complete the discharge application, but collection will start up again if you do not submit an application within the 120 day period. The Department says that the suspension of collection does not include administrative wage garnishment or Treasury offsets.; The Department or guaranty agencies for FFEL loans may, however, stop or reduce offsets during this period.
What You Can Do
There are ways to get relief from the seizure, but few seniors know their options, or they find the process difficult to see through. Here are some options.
Apply for a disability waiver. Seniors who are disabled with a condition not expected to improve may qualify to have their loans canceled with a total and permanent disability discharge. Though the process can be oneroussuch as the need to document it annuallymore than one-third of people in default were able to pay off or cancel their debt with this option. More than half of borrowers having their Social Security seized are on disability payments. One caveat: The amount forgiven is considered income and you will owe taxes.
Apply for financial hardship. You may request a reduction or suspension of the garnishment of your Social Security because of financial hardship. It is up to the Department of Education whether they will grant it. ;You can call the Department of Education to request a suspension, then follow up with the documentation needed for them to review.
Consolidate your loan.;You could get out of default by converting your defaulted federal loan into a federal consolidation loan. You then have the option of doing an income-based repayment plan, which can make the payments more manageable and could reduce them to less than what is taken from Social Security.
Us Department Of Veterans Affairs
Veterans who the VA determines to be unemployable due to a service-connected disability or disabilities that are 100% disabling are considered to have a total and permanent disability. Veterans may also be considered to have a total and permanent disability if they have a VA determination that they are totally disabled based on an individual unemployability rating.;
Private Student Loan Forgiveness Due To Disability
If you borrowed from a bank, credit union or another private lender, your access to loan forgiveness, even in cases of disability, is likely more limited. However, some lenders will forgive your remaining balance in the case of a disability or death.
If your lender offers this option, be prepared to provide documentation of your disability. Each lender will have a unique application process and qualifying criteria.
|Private student loan lenders that offer student loan disability discharge||Fine print|
|Laurel Road||Primary borrower only Lender may forgive some or all of the debt if the borrowers permanently disability affects their income Only for loans originated after the spring of 2015|
|Disability: Federal loan-like verification standards Death: A certified copy of the borrowers death certificate could be required|
|Parent loans are forgiven if the student beneficiary is dead or becomes disabled|
Applying For Federal Student Loan Forgiveness For Disability
If you think you meet the requirements of TPD and want to apply for student loan forgiveness due to disability, contact Nelnet about your options. You can call them at 888-303-7818 or email them at You can also fill out an application or have someone complete it on your behalf.
When applying for student loan disability discharge via TPD, youll be provided with the info you need to fill out the application. Nelnet will then check to see if your loans are eligible for forgiveness. Finally, they will contact your loan holders and notify them that loan payments should be suspended for 120 days.
At that point, youll be informed you can stop making payments and should fill out the application and submit it for processing. If you do not hand in your application within 120 days, your student loan payments will resume.
Once youre finished with your application, you can send it along with any supporting materials to:
U.S. Department of EducationP.O. Box 87130Lincoln, NE 68501-7130
Student loan forgiveness for disability applications are typically reviewed within 30 days. If youre approved for discharge due to SSA documentation or certification from a doctor, you will be subject to a three-year review period that starts on the date that your discharge is finalized and approved. During the review period, your income and any changes in your status will be monitored.
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My Student Loans Were Forgiven For My Disability But It’s Not All It’s Cracked Up To Be
My family doesnât yell. Sometimes we argue, and we are good at sarcasm, but fights hardly ever get loud. When I got the option to have my student loans discharged for disability, I remember all of the yelling as my family and I fought over whether I should accept. Total and permanent student loan discharge sounds great, right? Well, itâs not that easy.
Student loans and their subsequent interest make financial independence a near Herculean task for millennials to achieve. But Iâm not sure even Hercules could help a disabled person achieve financial independence.
While student debt is a problem across the board, for those living with a disability â like me, living with cerebral palsy â there are additional roadblocks. These can be of everything from finding a job to pay off the loans, to navigating the programs that are meant to help you but can actually make things worse, to just dealing with the stigma and emotions that come with taking advantage of the resources available to you. When I learned about loan discharge during graduate school around 2014, I had over $25,000 in public student loans. It seemed like an amazing opportunity when I got my Total and Permanent Disability Discharge qualification to discharge all of them. On paper, a program promising to erase thousands of dollars of debt looks great. But nothing comes for free â even student loan discharge.
Three years in poverty is a long time.
makes me feel like kind of a failure sometimes.
What Is Tpd Discharge
Total and Permanent Disability discharge is when your obligation to pay your Direct, Federal Family Education Loan , and/or Perkins federal student loans is discharged due to your total and permanent disability. This also applies to TEACH Grant service obligations.
You may have heard of TPD discharge referred to as disability loan forgiveness. These are the same program.
You also may have heard the phrase Nelnet disability discharge. Nelnet is authorized by the Department of Education to administer the TPD loan forgiveness program. For our purposes, Nelnet and the DOE are interchangeable.
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Total And Permanent Disability Discharge Program
You may qualify for TPD discharge if you are totally and permanently disabled. Qualifying federal loans include Direct Loans, FFEL Program loans, and Perkins Loans. This student loan forgiveness program may also relieve you from completing a TEACH Grant service obligation.
Normally, you must complete and submit a TPD discharge application form with evidence of your total and permanent disability. Some borrowers may not have to submit these anymore because their TPD status appears in the Social Security Administration database.