The Disabled Are Eligible for Loan Forgiveness

by | Jan 25, 2023 | Loan Forgiveness

If a former college student with an outstanding student loan balance becomes disabled, he or she may not need to repay the debt under the provisions of the Total and Permanent Discharge (TPD) program. To obtain debt forgiveness, the individual needs to apply and provide evidence of a physical or a mental disability that substantially impairs the ability to work. Over 400,000 disabled former students have been granted $7.8 billion in loan forgiveness through the TPD program

The TPD program applies to loans made under these Federal student loan programs:

  • William D. Ford Federal Direct Loan (Direct Loan) Program loan, 
  • Federal Family Education Loan (FFEL) Program loan, and 
  • Federal Perkins Loan (Perkins Loan) Program loan. 

A former student may also be relieved of the requirement to complete a TEACH Grant service obligation on the basis of disability. 

The TPD Discharge Process

Before a Federal student loan can be discharged or a TEACH Grant service obligation  terminated, the disabled former student must provide information to the U.S. Education Department (ED) that constitutes proof of total and permanent disability. The ED will review the information to determine if the individual is eligible for forgiveness.

Former students who think they are eligible for a TPD discharge must provide information required by the ED by completing a TPD Discharge Application. Depending upon the circumstances, the applicant may either need to submit supporting documentation or have their physician complete part of the application. 

Veteran’s and Social Security Administrations

The ED cooperates with the Department of Veteran’s Affairs (VA) and the Social Security Administration (SSA) so that the ED is apprised promptly when a former student becomes qualified for a TPD discharge. The process works as follows:

  • Veterans Affairs – Veterans are automatically qualified for a TBD discharge if the VA has determined that they have a service-connected disability that is 100% disabling. Veterans who believe that they have a qualifying VA-determined disability but have not been notified by the ED should submit a TPD Discharge Application. They will need to provide documentation that shows when the VA notified them of their disability status.
  • Social Security – A former student also qualifies for a TPD discharge if

they’re receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits and their next scheduled disability review is within five to seven years. 

If the ED determines that a borrower qualifies as a result of their VA or SSA disability status, they will contact them to let them know how to obtain a TPD discharge of their student loans or the termination of their service obligation.

Certification By Physician

In the absence of a disability determination by the VA or SSA, a disabled former student can submit a certification from a doctor (M.D.) or osteopathic physician (D. O.) that they are totally and permanently disabled. The physician must complete Section 4 of the TPD Discharge Application to certify that the applicant is unable to engage in substantial gainful employment, which is defined as work performed for pay or profit that involves doing significant physical and/or mental activities, because of a medically determinable 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. 

The TPD Discharge Application Form

The following steps must be taken to apply for a TPD loan discharge or the termination of a TEACH Grant service obligation:

  1. An applicant must initiate a TPD Discharge Application online on the ED website. The ED will use the applicant’s answers from Sections 1 and 2 of the form to create a partially completed application. ED converts the partial application into a PDF file that can be downloaded by the applicant and printed.
  • After printing the partial application, the applicant needs to complete Section 3, Applicant’s Request, Authorization, Understandings, and Certifications.
  • The applicant needs to attach required supporting documentation or have a physician complete Section 4 of the form, Physician’s Certification. 
  • The applicant mails the application to the ED with any required attachments.

Steps Taken by ED 

The ED takes the following actions after receiving a TPD Discharge Application: 

  1. ED contacts the holders of the applicant’s eligible Federal student loans and instructs them to suspend billing on the loans while eligibility for discharge is under review. The applicant is not required to make payments on their loan during this period. If any of the applicant’s loans are in default and back payments are being collected by wage garnishment or Treasury Offset payment, this activity can continue. 
  • The ED will contact the administrator of the applicant’s TEACH Grant program to advise them that the applicant is not obligated to participate in the program while their TBD Discharge Application is under review. 
  • ED reviews the TPD Discharge Application along with supporting documentation to determine that the application is complete, it complies with requirements, and the information is verifiable.
  • If the request for TPD discharge is approved, wage garnishment or Treasury Offset payments will cease and the remaining loan balance will be forgiven.
  • If the request for TPD discharge is approved, the administrator of the TEACH Grant will be advised of the termination of the applicant’s service obligation.
  • The applicant is informed by the ED of the determination in writing.

Appeals Process

If an applicant is deemed ineligible for a TPD discharge, they may provide ED with additional information that supports their application within one year of the date of the denial letter. The ED will reevaluate the existing TPD Discharge Application in light of the new information. Individuals who do not provide the ED with new information within one year, but want an eligibility re-evaluation, must submit a new TPD Discharge Application.

A Representative Can Act on Behalf of a Disabled Person

A disabled former student can designate an individual or organization to complete and submit a TPD Discharge Application on their behalf and to assist throughout the process. To designate a representative, the applicant and the representative must complete an Applicant Representative Designation form. ED must receive and process this form before they will begin working with the representative. The form is necessary even if the representative already possesses Power of Attorney to act on behalf the applicant.