Will My Student Loans Be Forgiven if I'm Approved for Disability Benefits?

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).

Who Is Eligible for a TPD Discharge?

To be eligible for a TPD discharge, you must have a severe, long-term disability. In the Department of Education's words, you must be "totally and permanently disabled." Specifically, 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. (20 U.S. Code § 1087.) And your impairment must:

• have lasted five years
• be expected to last for five years, or
• be expected to result in death.

You can get a TPD discharge if your doctor or licensed health care provider submits a certification that the above information is true, but you might not need to submit any paperwork if you receive disability benefits from the Social Security Administration (SSA) or the Department of Veterans Affairs (VA).

Will I Automatically Get a Discharge if I Receive SSDI or SSI?

The rules for proving you're disabled to get a federal TPD discharge are similar to the eligibility rules Social Security uses for disability benefits, but they're even more difficult to meet. So being approved for Social Security disability insurance (SSDI) or Supplemental Security Income (SSI) benefits doesn't necessarily mean that you'll be approved for a TPD discharge. The main difference between The TPD definition of disability and Social Security's definition is that Social Security requires that your inability to work last (or be expected to last) only one year, not five years.

Certain groups of Social Security disability recipients should be able to qualify automatically for a TPD discharge. If Social Security gives you a five-to-seven year review date when you're approved for benefits, meaning you're classified in a group called "Medical Improvement Not Expected," you should automatically qualify for a federal loan discharge. Social Security has decided that you aren't likely to improve enough to go back to work, so the Department of Education thinks it's a good bet that you'll meet the five-year requirement for the TPD discharge. (34 CFR § 685.213.)

Last year, the Department of Education added several new categories of disability recipients who qualify for an automatic discharge. Now you're eligible for a discharge if any of the following are true:

• Your next continuing disability review (CDR) has been scheduled at three years (your group is "Medical Improvement Possible").
• You've been receiving SSDI or SSI (for disability) for five years or more.
• Your disability onset date (for SSDI or SSI) was five years ago or earlier.
• You were approved for disability benefits due to a Compassionate Allowance.

If you're currently receiving disability benefits from Social Security, and you meet one of the above requirements, you don't need to apply for forgiveness for your federal student loans. The U.S. Department of Education does a quarterly data match with Social Security to see who qualifies and will send you a notice of your discharge if you're eligible.

Will I Automatically Get a Discharge if I Get VA Disability?

The TDP discharge rules also don't match up to the definition of disability for veterans disability benefits, and the Department of Education doesn't automatically grant TPD discharges for service-connected disabilities. After all, many veterans receive disability ratings for relatively minor impairments, through a rating system where disabilities are rated from 0% to 100%.

Since TPD discharges are only available for the most serious of disabilities, to automatically qualify for a TPD discharge because of veterans benefits, one of the following has to be true:

• You have a service-connected disability (or disabilities) that is 100% disabling (it's rated 100%).
• You are totally (100%) disabled based on an "individual unemployability rating" (TDIU).

The VA periodically sends information about veterans who could qualify for TPD discharge to the Department of Education, so if you have a 100% disability rating, you shouldn't have to fill out a TPD discharge application. The Department of Education will send you a notice that it will discharge your student loans or your service obligation through your TEACH grant (see below).

Which Loans Are Eligible for a Disability Discharge?

Borrowers of the following loans can get a federal total and permanent disability discharge for disability:

• William D. Ford Federal Direct Loan Program loans
• Federal Family Education Loan (FFEL) Program loans, or
• Federal Perkins Loans (FPLs).

Service obligations for Teacher Education Assistance for College and Higher Education (TEACH) Grants can also be discharged due to disability.

Other loan programs and private loans have their own discharge rules.

Are There Any Cons to Applying for a Discharge?

If you get a discharge, you'll have to jump through a few hoops to get federal student loans in the future, and if you request a new student loan or TEACH grant within three years of your discharge, you'll have to resume payments on the discharged loan before you can receive the new loan.

And starting in 2025, student loan balances that are discharged will be taxed by the federal government as income, unless Congress renews the tax provision that provided this tax relief. Also, a few states will tax the amount of your discharged loans as income, including California. (Contact your state tax office for more information.)

Can I Lose the Discharge if I Start Working or Get Better?

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.

This post-discharge monitoring period has changed so that you don't have to report earnings and you won't lose the discharge if you do some work.

However, the three-year monitoring period does still exist for people who received a discharge through their Social Security records or a doctor's certification. During these three years, the discharge can be canceled, and your loans reinstated, if any of the following are true:

• You receive a new federal loan or TEACH grant.
• You receive a notice from Social Security stating that you're no longer disabled, or that your scheduled review no longer meets the required review period discussed above. (You must notify the Department of Education if you get such a notice.)

But if your loans are reinstated, you at least won't have to pay the interest that would have accrued on the loans during the time your loans were discharged.

And after the three-year period, the discharge becomes permanent, even if you become able to work full-time again or Social Security says you're no longer disabled.

Veterans who received a TPD loan discharge due to being totally disabled don't have any type of monitoring period. Their TPD discharges are permanent immediately.

Do Parent PLUS Loans Qualify for a Disability Discharge?

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.

Can I Get Private Loans Discharged Due to Disability?

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 will 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. Ask your lender for details.

How Do I Apply for a Disability Discharge?

People who aren't receiving Social Security or veterans disability benefits, or who don't qualify for those benefits for technical or financial reasons, still have to apply for a TPD discharge from the Department of Education. You can qualify for a TPD discharge without getting Social Security or VA benefits if your doctor certifies that you're 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.

To apply for a TPD discharge you must complete a TPD Discharge Application. Your physician or other health care provider 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 health care provider who fills out the form must be licensed to practice and be one of the following:

• doctor of medicine (M.D.)
• doctor of osteopathic medicine (D.O.)
• nurse practitioner
• physician's assistant, or
• certified psychologist at the independent practice level.

You then submit the application to your loan servicer, and you need to 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?)