Living with a chronic illness or serious injury is hard enough without having to worry about making payments on your student loans. Thankfully, the federal government provides the option of canceling a student loan borrower’s federal student loan debt if the borrower is unable to work due to a disability.
Written by Upsolve Team.
Updated June 26, 2023
What’s Considered a Total and Permanent Disability?
If you become disabled due to an illness or injury, you may be eligible for Total Permanent Disability (TPD) discharge of your federal student loan debt. Simply put, a total and permanent disability is a mental or physical condition that prevents you from working and earning a living or engaging in “substantial gainful activity.”
There’s also a time component to this: Your disability has to have lasted or be expected to last for a continuous period of at least 60 months (five years). Conditions that are expected to result in death may also be considered total and permanent disabilities.
There are three ways to qualify for student loan forgiveness due to a total and permanent disability:
You are a disabled veteran who was discharged with a service-related disability.
You collect Social Security Disability Insurance (SSDI) and have a review period of five or more years.
Your doctor certifies that you can’t work.
What Student Loans Are Eligible for TPD Discharge?
A TPD discharge can provide great financial relief if you have any of these qualifying loans:
William D. Ford Federal Direct Loan or Federal Direct Consolidation Loan
Federal Family Education Loan (FFEL)
Federal Perkins Loan
Note: If you have a Parent PLUS loan, you may apply for a discharge based on your own disabilities, but not those of your children. Also, if there are two parent borrowers listed on the PLUS loan and only one has a disability, the debt can’t be discharged.
You can also qualify for TPD loan discharge if you have completed a Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligation.
TPD student loan forgiveness is only for federal student loans. It does not apply to private student loans.
How To Apply for a TPD Discharge: Automatic Discharge
In September 2021, the U.S. Department of Education (DOE) began automatically discharging student loan debt for borrowers eligible for TPD discharge. The department works with the Social Security Administration (SSA) and the U.S. Department of Veterans Affairs (VA) to identify eligible student loan borrowers. This has made the discharge process simpler for disabled borrowers.
You’ll know you’ve been flagged as eligible for this student loan forgiveness program if you receive a letter from the DOE stating you qualify. If you don’t receive an automatic discharge letter, you can still apply through DisabilityDischarge.com.
How To Apply for TPD Discharge if You Don’t Get an Automatic Discharge Letter
The TPD discharge application process is relatively simple. If you didn’t get an automatic discharge letter but believe you qualify for TPD loan forgiveness, here are the three basic steps to apply:
Gather supporting documentation to prove your eligibility for discharge. We’ll talk more about supporting documentation later in the article.
Send your completed application and supporting documentation to Nelnet, the TPD discharge servicer. You can do this by mail, fax, email, or online.
If you choose to mail your application, send it to:
U.S. Department of Education – TPD Servicing
P.O. Box 87130
Lincoln, NE 68501-7130
If you choose to fax your application, send it to: (303) 696-5250.
If you choose to email your application, send it to: firstname.lastname@example.org.
You can also apply online through DisabilityDischarge.com.
Your application should be reviewed within 30 days.
Can You Designate Someone To Represent You in Your TPD Application?
You may choose an individual or organization to represent you in matters related to your total and permanent disability discharge request. Both you and your representative must complete an Applicant Representative Designation form.
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What Supporting Documentation Should You Submit for a TPD Discharge?
The U.S. Department of Education will evaluate supporting documentation to determine whether you qualify for TPD discharge of your student loans. The kind of documentation you provide will depend on whether you are a veteran working with the VA, an SSDI recipient, or neither of these.
Proving TPD as a Veteran: Supporting Documentation
If you are a veteran and the VA has determined you are unemployable due to a service-connected disability, you may qualify for a discharge. You will need to provide documentation from the VA showing that you have received one of the following two types of VA disability determinations:
A determination that you have at least one service-connected disability that is 100% disabling
A determination that you are totally disabled based on individual unemployability rating
Your disability must be service related in order to qualify for a VA disability discharge. Veterans qualify for a TPD 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 DOE after the effective date of the VA determination.
Proving TPD as an SSDI Recipient: Supporting Documentation
If you collect Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), you may qualify for discharge by providing a copy of your notice of award from the SSA. Your next scheduled disability review must be within five to seven years from the date of your most recent disability determination.
Proving TPD Based on a Physician’s Certification: Supporting Documentation
If you are not a veteran and don’t collect Social Security benefits, you need to have a doctor complete the application form explaining your condition and why you cannot be gainfully employed. You must submit the application with a physician’s certification within 90 days of the date of the certification.
The doctor must describe the reasons why the disability prevents you from working. They can’t just list the diagnosis.
The physician who certifies your TPD discharge application must be a doctor of medicine (M.D.) or doctor of osteopathy/osteopathic medicine (D.O.) who is licensed to practice in the United States.
What if Your TPD Discharge Is Denied?
If your TPD discharge application is denied, you will receive a denial letter by mail explaining the reasons for the denial. Your loan holders/lenders will resume collection activity on your loans.
However, you may have the option to appeal this decision. You may ask Nelnet to reevaluate your discharge application if you provide new supporting information within 12 months of receiving the notice that your discharge application was denied.
If you don’t request a reevaluation within 12 months, you will have to submit a new application with new information about your disabling condition that was not provided with your prior application.
What Is a Post-Discharge Monitoring Period?
If you are approved for a TPD discharge based on a physician certification or SSA documentation, there is a three-year monitoring period. During that time, the DOE will review your income and other eligibility requirements.
You will receive a letter during the monitoring period requesting verification of income, if you have any. You must respond with appropriate documentation. This includes:
Federal or state income tax return
Annual earnings statement from the SSA
Earnings statement from a state or local agency
Note that only income earned from working counts. Disability or retirement pay won’t be considered. Also, if you’re a veteran whose TPD discharge application is approved based on documentation from the VA, you aren’t subject to a post-discharge three-year monitoring period.
Can My Discharged Loans Be Reinstated?
Your discharged loans will be reinstated if you take out any new federal student loans, receive any federal student loan payments, or partake in a TEACH Grant service obligation during the three-year monitoring period. You must also earn no more than 100% of the poverty guideline for a household of two during the same monitoring period.
Your loan will also be reinstated if the SSA notifies you of certain changes in your disability determination, such as no longer considering you totally and permanently disabled or removing the 5-year or 7-year review period for SSDI or SSI.
If My Student Loans Are Forgiven With a TPD Discharge, Will That Money Be Taxed?
As of Jan. 1, 2018, loan amounts discharged due to total and permanent disability are not considered taxable income by the IRS. Even though you don’t have to pay federal tax, you may need to pay state tax on the discharged amount depending on what state you live in. Consult with a tax professional to better understand your tax obligation.
Can You Take Out Student Loans While Receiving TPD Discharge?
You may not take out new federal student loans during the three-year monitoring period. The regulations only prohibit you from receiving new loans under the Perkins Loan, FFEL, or Direct Loan programs. This also includes TEACH Grants.
A key exception to this rule is that you are permitted to receive an FFEL or Direct Consolidation Loan during the three-year period as long as it does not include any loans that were discharged. Another exception is if you received a loan disbursement after the date the doctor signed the application, as long as the disbursement is returned within 120 days of the disbursement.
You can take out private loans during the monitoring period. If you can attend without federal student loans, you should be able to go to school without jeopardizing your discharge eligibility.
Don’t Qualify for TPD Discharge? Here’s Another Option if You Can’t Pay Your Student Loans.
If you have an injury or illness that doesn't qualify as a total and permanent disability but still affects your ability to work or make enough income to support yourself and repay your student loan debt, you may be wondering if there are other options. Take heart: There are! If you haven’t already, read our popular article 7 Options if You Can’t Make Your Student Loan Payments.
If you think you’ve already tried everything. Consider filing Chapter 7 bankruptcy to erase your federal student loan debt for good. Thanks to the new guidelines from the Department of Justice and the Department of Education, eligible federal student loan borrowers can discharge student loans through bankruptcy more easily than ever before.
Our team of bankruptcy experts has created a free student loan discharge screener to help you check your eligibility for student loan discharge through bankruptcy!