Total and Permanent Disability Discharge
This discharge requires certification from a doctor that you are unable to work and earn money because of an illness or injury that is expected to result in death, last 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 (5 years).
FFEL, Direct and Perkins loans can be discharged for qualified borrowers. Parents with PLUS loans may apply for discharge based on their own disabilities, not those of their children. If two parents have a PLUS loan and only one becomes disabled, the other parent remains obligated to repay the loan.
There are three ways to meet the Department of Education disability discharge standard:
1. Veterans who have been determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected condition qualify for this discharge without having to provide additional documentation from a doctor. Veterans that obtain a discharge in this way are eligible for a refund of any student loan payments received by the Department of Education after the effective date of the V.A. determination, or
2. If you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can submit a Social Security Administration (SSA) notice of award for SSDI or SSI benefits stating that your next scheduled disability review will be within 5 to 7 years from the date of your most recent SSA disability determination, or
3. You can submit certification from a doctor that you are totally and permanently disabled. You must do this within 90 days of the date of the doctor’s signature on the form. Tell your doctor to be prepared to get follow-up letters and requests from the loan holder and Department of Education. The Department says that it is sending notices to borrowers to alert them if their doctors are not responding to requests for additional information. If you get this notice, you should contact your doctor as soon as possible.
The Department announced in April 2016 a process to identify and assist disabled borrowers who may qualify for a discharge. The Department started matching borrowers to the Social Security database and alerting those borrowers about the availability of the disability discharge. In April 2018, the Department announced a similar process to match data from Veterans Affairs with the Department’s records and then notify individual veterans about their eligibility for loan discharge.
Taking this a step further, in August 2019, the Trump Administration announced that it will automatically discharge student loans for totally and permanently disabled veterans unless they choose to opt out of the process. But according to news reports in November 2019, the Department is delaying these plans.
Applying for Disability Discharge
You should let Nelnet, the Department of Education’s 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 (8 a.m. to 8 p.m. ET) or email at DisabilityInformation@Nelnet.net. 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 Department’s 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.
You may start the application process on-line. The Department’s contractor Nelnet will then send you a partially completed form with your on-line responses filled in. You will need to complete this form and send by regular mail. You do not have to start on-line. You can also fill out the entire form on your own and send by regular mail. You must use the most recent form to apply. You only have to send one application to Nelnet even if you have a number of different loan holders. It is a good idea to send by certified mail and get a receipt. The applications should be mailed to U.S. Department of Education, P.O. Box 87130, Lincoln, NE 68501-7130.
Nelnet will review your application and will send approved applications to the Department of Education for final approval. If the Department approves the application, you will get a notice stating that your loan is discharged and notices about the three year monitoring period if applicable. You should also get a notice if the Department denies your application with a list of the reasons for denial. You may appeal denials to federal court.
If you are approved, the discharge is effective as of the date the doctor signed the form or as of the date the Department received the SSA notice of award. Any payments received after the date the doctor signed the form or as of the date the Department of Education received the SSA notice of award must be returned.
There is no reinstatement period for veterans applying through the separate veteran’s process. In August 2019, the Trump Administration announced that it will automatically discharge student loans for totally and permanently disabled veterans unless they choose to opt out of the process.
For others, after a final discharge, the Department will continue to evaluate you for three years and can reinstate the loan in certain circumstances. The three year period begins on the date the discharge was granted. Your loan will not be reinstated as long as you do not take out any new federal student loans or TEACH grants during the three years and as long as you do not have earnings from work that are more than 100% of the poverty level for a family of two. This means that you are allowed to try to work, but if you earn more than this amount, the Department assumes you are not really permanently disabled. You will also be reinstated if you applied using an SSA award notice and you receive a subsequent notice from SSA indicating that you are no longer disabled or that your disability review will no longer be the five to seven year period.
The Department will monitor your earnings during this three year period by requiring you to submit documentation of employment earnings, usually on an annual basis. The Department only considers earnings from work, not from disability, retirement or other “non-work” pay.
The Department will send you a form to get information about your earnings (or lack of earnings) during the reinstatement period. If you have earned some income from employment, you will need to provide documentation to show that those earnings are below the allowable limit. The form includes a list of acceptable documentation. If you do not have earnings from employment, you should only have to sign the form. This certifies that you had no earned income from employment during the reinstatement period.
If you received a disbursement of a federal loan after the date the doctor signed the form or after the date you submitted the SSA award notice, you can still qualify for the discharge as long as you return the funds to the loan holder within 120 days of the disbursement date.
Disability Discharge Tips and FAQs
Q: Is it possible to work and still be eligible for a disability discharge?
A:Even though the government may say otherwise, the answer should be yes. You are allowed to earn less than 100% of the poverty line for a family of two during the three year “watch period” after a final discharge is granted. This allows you to explore whether you can get back in the workforce.
Q. Can I qualify if I have a disability that prevents me from working in the occupation for which I was trained?
A: Not if you are able to work in a different occupation. To be eligible, your disability must make you unable to engage in any type of substantial gainful activity.
Q: Is evidence of a Social Security or Veterans Affairs disability decision sufficient to qualify for a student loan discharge?
A: For V.A., yes, if you have been determined to be unemployable due to a service-connected condition. For Social Security, in some cases, yes as of July 1, 2013. If you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can submit a Social Security Administration (SSA) notice of award for SSDI or SSI benefits stating that your next scheduled disability review will be within 5 to 7 years from the date of your most recent SSA disability determination as a way of proving eligibility for a disability discharge. You may do this instead of submitting a certification from your doctor.
Q: Does it matter when my disability began?
A: No. Prior to July 2008, doctors signing disability discharge forms had to certify when the disability began. The rules were changed so that doctors must sign that you are disabled as of the date that they sign the form.
Q: Can I apply again if I was denied the first time?
A: Yes. This is more likely to be successful if there was a minor problem the first time around such as the doctor’s failure to fill in his license number. But you can also reapply if you have been able to gather stronger evidence of your disability. If the denial is based on a technical problem, you should also ask if you can correct the problem without having to reapply.
Q: How can I prove I’m not working during the three year “watch” period?
A: The Department will send you a form that looks like this or a similar form to get information about your earnings (or lack of earnings) during the reinstatement period. If you have earned some income from employment, you will need to provide documentation to show that those earnings are below the allowable limit. The easiest way to prove this is to provide a copy of your annual tax return. The Department also allows you to submit a number of other types of documents to prove that you do not have earnings above the limit, including:
1. Pay stubs showing year-to-date income,
2. W2, or
3. Social Security Statement. (Visit www.ssa.gov/mystatement. You must set up an account to see, download, save and print your full statement of earnings.)
If you do not have earnings from employment, you should only have to sign the Department’s “post-discharge monitoring” form. By signing the form, you are certifying that you had no earned income from employment during the reinstatement period.
Q: What happens if I get a final discharge and later want to take out a new federal loan?
A: You will have to get a doctor to certify that you are able to work. You will also have to sign a statement that the new loan cannot be discharged in the future based on any current impairment unless that impairment substantially deteriorates. The Department claims that this will also be required if your loan is reinstated.
Q: Who can I contact at the Department for more information?
A: For questions about applying for a total and permanent disability (TPD) discharge or to check on the status of an existing request, you should contact the Nelnet Total and Permanent Disability Servicer:
TDD/TTY: A borrower who is hearing-impaired may Web chat with a representative by clicking on “Chat Now” at the top of this page.
Special Assistance Team: A borrower who has special needs and requires assistance navigating the TPD discharge process simply needs to request assistance when he or she contacts the Nelnet Total and Permanent Disability Servicer.
Web site: www.disabilitydischarge.com
Monday – Friday 8:00 AM to 8:00 PM (ET)
Saturday – 8:00 AM to 7:00 PM (ET)
Sunday – Closed
U.S. Department of Education
P.O. Box 87130
Lincoln, NE 68501
For overnight delivery:
U.S. Department of Education
121 South 13th Street, Suite 201
Lincoln, NE 68508
Your government loans will not survive your death. This means that your estate will not have to pay back your student loans. Also, the death of both parents with a PLUS loan (assuming both took out the loan) is grounds for the “death discharge.” The death of only one of the two obligated parents does not cancel a PLUS loan. A parent can also discharge a PLUS loan if the student for whom the parent received the loan dies.
Discharge because of the borrower’s death (or, in the case of PLUS Loans, the death of the student for whom the parent borrowed) is based on an original or certified copy of the death certificate submitted to the school (for a Federal Perkins Loan) or to the holder of the loan (for a FFEL or Direct Stafford Loan). In addition to the death discharge, the Higher Education Act specifically provides that student loan collection must end after death.
Tax Consequences for Death and Disability Discharges
Under a law recently passed by Congress, loans cancelled because of disability or death after December 31, 2017, will not be taxed. More information can be found in this blog post. The Department’s web site also includes information about tax consequences for earlier discharges and a warning that there may be state tax consequences even if there are no federal tax consequences. It is a good idea to consult a tax professional for more information.