Permanent Disability Forgiveness

TOTAL AND PERMANENT DISABILITY DISCHARGE

There is possible to relief to Federal Student Loan debt if you are not able to make an income due to a medically recognized disability. If the disability is determined to impair your mental or physical health in a way that causes you to be unable to work, prof of this disability could qualify your loans for Disability Discharge.

Proving your total and permanent disability

There are a couple ways to prove your disability makes you eligible for your Federal Student Loans to be discharged. Once proven, you could have the balance of your Federal Student Loans completely relieved. The Department of Education considers prof of this nature by the following…

-You can submit an award letter from Social Security Administration (SSA) showing your are granted Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI).Using this method to prove your case for disability discharge does require that you are deemed permanently disable and that your review for the disability is within the next five to seven years. A review scheduled for less than five years away will disqualify you for a disability discharge.

-Your treating physician can submit a certified document declaring that you are totally and permanently disabled. This document must state the cause or type of disability you suffer, the amount of time you have and are expected to continue suffering the disability, and that the disability has caused you an inability to work or gain an income.

-A service related injury can be proven by documentation from the Office of Veterans Affairs stating that you are unemployable.

-Disability must be expected to last at least 60 months (5 yrs), or expected to end with death.

The Process

Once you have submitted evidence of your disability by documentation discribed above, you application for discharge may receive a determination from Department of Education with in five months. It can happen as soon as three months depending on the volume of claims being processed. Your application for Disability Discharge and proven documentation will be sent to the servicer for loans in an effort to stop collection on your loans until determination is finalized.

Approval of your disability discharge will end any future attempts to collect on Federal Student Loans as well as refund you any payments toward your loans that were made after your disability was declared to have began. However; if your claim for Disability Discharge is denied, all collection activity on your Federal Student Loans will resume and you will receive notice from the Department of Education as to why your loan discharge could not be approved.

You should know that if you receive a Disability Discharge approval, the balance that is discharged is considered taxable income by the IRS on the year that they are discharged as long as the amount discharged is at least $600. Also, you will not be provided another Federal Student Loan unless you are later found fit for gainful employment or work activity by your treating physician. If this occurs, you will be asked to sign a statement of acknowledgment that any new student loans provided to you will not be discharged unless there is a new condition that leaves you again disabled granting the ability to apply for a Disability Discharge for a second time. Previous approvals for Disability Discharge will not apply to any new loan even if the disability resolved and became an issue later, it must be a different/ separate medically recognized condition.

What to consider

Knowing that any discharge of your Federal Student Loan balance will be considered taxable income by the IRS during the tax year the discharge was applied may be a reason to consider not applying for Disability Discharge at all or holding off on discharge until your able to handle the financial responsibility of that tax bill. If this is a concern for you, you are still afforded the process of a Direct Consolidation of your Federal Student Loans and ability to enroll in an IDR.

Having no other income than social security may allow you monthly payments of $0. If you are disabled but choose not to discharge your loan(s), seek a Direct consolidation and Income Driven Repayment Plan. These plans offer Federal Loan Relief after 20-25 years in repayment and may allow you to hold off on that tax bill until you are able to afford it.

Choosing this method will require you to annually recertify your income with documentation to keep the payments at $0 per month if that is what is approved. Missing an annual recertification could result in monthly payments resuming so be mindful of this aspect of the process when choosing this course of action.