Disabled Borrowers Are Eligible for Loan Forgiveness

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

• Federal Family Education Loan program, and

• Federal Perkins Loan program.

A former student may also be relieved of the requirement to complete a TEACH Grant service obligation with the U.S. Education Department (ED) due to a disability.

The TPD Process

Before a Federal student loan can be discharged or a TEACH Grant service obligation  terminated, the disabled borrower must provide proof of total and permanent disability to the ED. Borrowers who think they are eligible for a TPD discharge need to provide the documentation required by the ED with a TPD Discharge Application. The applicant may submit supporting documentation and/or have their physician complete part of the form. The ED will review the application to determine if the borrower is eligible.

Veterans and Social Security Administrations

The ED cooperates with the Department of Veteran’s Affairs (VA) and the Social Security Administration (SSA) so that it is apprised promptly when a former student is determined to be 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 fully disabling. Veterans who have a qualifying VA-determined disability but have not yet been contacted by the ED should submit a TPD application. They will need to provide documentation that shows the date that the VA notified them of their disabled status.

• Social Security – A borrower also qualifies for a TPD discharge if

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

In 2021, the ED launched a data-matching program with the SSA and VA to automatically discharge loans for eligible disabled borrowers. If the ED determines that a borrower qualifies for termination of their debt or service obligation due to their VA or SSA disabity status, they will notify the borrower and the Federal Loan or Teach Grant service provider.

Certification By Physician

In the absence of a disability determination by the VA or SSA, a disabled borrower can submit certification from a medical or osteopathic physician that they are totally and permanently disabled. The physician must complete Section 4 of the borrower’s TPD 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, due to a medically determinable physical or mental impairment that:

1. • Can be expected to result in death,

1. • Has lasted for a continuous period of not less than 60 months, or

1. • Can be expected to last for a continuous period of not less than 60 months.

The TPD Application

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

1. An applicant must initiate a TPD application online from 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 form. ED converts the partial form into a PDF file that is downloaded by the applicant and printed.

2. After printing the partial application, the applicant completes Section 3, Applicant’s Request, Authorization, Understandings, and Certifications.

3. The applicant obtains required supporting documentation or has a physician complete Section 4 of the form, Physician’s Certification.

4. The applicant mails the completed form to the ED with required documents.

Steps Taken by the ED

The ED takes the following actions after receiving a TPD application:

1. ED contacts the applicant’s Federal student loans service provider 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 loans 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, such activity can continue until the servicer is notified otherwise.

2. 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 application is under review.

3. ED reviews the TPD application along with supporting documentation to determine that the application is complete, complies with requirements, and that the information is verifiable.

4. The ED informs the applicant and service provider of the determination.

5. If the request for a TPD discharge is approved, wage garnishment or Treasury Offset payments will cease and the remaining loan balance will be forgiven.

6. 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.

7. If the discharge is approved, the applicant may be subject to a three-year monitoring period during which income and disability status are reviewed. Loans or service obligations could be reinstated if the applicant does not meet the program’s requirements during this period.

8. While forgiven loan funds are not considered income for Federal tax purposes through December 31, 2025, some states may tax the forgiven amount as income. A tax expert should be consulted for advice on state laws.

Appeals Process

If an applicant is deemed ineligible for a TPD discharge, they may provide ED with additional documentation that supports their application within one year of the date of the denial letter. The ED will re-evaluate the TPD application in light of the new documentation. Individuals who do not provide the ED with new documentation within one year, but want to be re-evaluated, must submit a new TPD program application.

A Designated Representative

A disabled borrower can designate an individual or organization to submit a TPD  application on their behalf and to assist them throughout the process. To designate a representative, the applicant and the representative must complete and submit an Applicant Representative Designation form. ED must receive and approve 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 borrower.