If you have federal student loans, you may be eligible to have your loans canceled through a "total and permanent disability" (TPD) discharge if you become disabled. A discharge means that you don't have to repay the loans (with some exceptions—see below).
Borrowers of the following loans can get a federal TPD discharge for disability:
Other loan programs and private loans have their own discharge rules.
The rules for a federal TPD discharge are similar to the eligibility rules the Social Security Administration (SSA) uses for disability benefits, but they're even more difficult to meet. Being approved for Social Security disability benefits does not necessarily mean that you will be approved for a TPD discharge.
For a TPD discharge, you must be unable to do any "substantial gainful activity" (work involving significant physical and/or mental activities) because of a "medically determinable" physical or mental impairment that has lasted 60 months, can be expected to last for 60 months, is expected to result in death, or is due to a 100% military-service-connected disability.
There are two differences between this definition of disability and Social Security's definition. First, Social Security requires that your inability to work last, or be expected to last, only one year, not five years. Second, Social Security doesn't automatically grant disability for service-connected disabilities.
That said, those who receive a Social Security disability award with a five-to-seven year review date, meaning that they are classified in a group called "Medical Improvement Not Expected" (MINE), should automatically qualify for a federal loan discharge. Social Security has decided that these cases are not likely to improve, so they should meet the five-year requirement for the TPD discharge.
If you're currently receiving disability benefits from Social Security, you no longer need to apply for forgiveness for your federal student loans. The U.S. Department of Education will do a quarterly data match with the Social Security Administration (SSA) and the Department of Veterans Affairs (VA). The Department of Education will send eligible borrowers notices of their approval for a discharge and they will have their loans forgiven.
Those who don't qualify for Social Security or veterans disability benefits for technical reasons still have to apply for a discharge. You can still qualify for a TPD discharge without getting Social Security or VA benefits if your doctor certifies that you are totally and permanently disabled, and that your disability has lasted continuously for five years, is expected to continue for five years, or could result in death.
If you aren't receiving disability benefits from the SSA or VA, to apply for a TPD discharge you must complete a TPD Discharge Application. Your physician has to fill out a section of the application stating your diagnosis, the severity of your condition, and the limitations caused by your condition. The physician 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.
You submit the application to your loan servicer, and you must submit an application for each loan holder. (To find out who your loan holder is, see Nolo's article Who Is Your Student Loan Holder?)
If you get a discharge, you will have to jump through a few hoops to get federal student loans in the future, and if you request a new loan within three years of your discharge, you will have to resume payments on the discharged loan.
All discharges are now free from federal taxes (at least until 2025 when Congress will consider renewing the tax provision), but your state might tax you on the amount of the discharged loans. (Contact your state tax office for more information.)
Before the COVID-19 pandemic, the Department of Education had a three-year monitoring period during which you had to report your earnings. If you earned over a certain amount of income during the three years after your discharge (not counting disability payments), your discharge could be taken away and your obligation to repay the loan could be reinstated. (The level of income allowed was your state's poverty guidelines for a family of two.)
But as of March 2021, you are no longer subject to the three-year monitoring period during which your income is monitored. The waiver of the post-discharge monitoring period is expected to remain in place until the end of the COVID-19 emergency relief period on January 31, 2022.
The post-discharge monitoring period does not apply to veterans who are 100% disabled.
In addition, your discharge can be revoked if your condition improves and you are no longer disabled.
If you borrowed student loans 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 private lenders do forgive the remaining loan 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.
Direct PLUS loans, informally known as parent PLUS loans, are made by the Department of Education to parents who are paying for their children's college education. Parents with PLUS loans can get discharges for their own disabilities, but not their children's disabilities. In addition, when both parents take out a parent PLUS loan, both have to become disabled for the loan obligation to be discharged.
Many private parent loan lenders now also offer disability discharges to parents who become disabled.
Updated December 16, 2021