How To Get This Student Loan Forgiveness
Beginning during the Obama administration, student loan borrowers with a total and permanent disability could get student loan cancellation through a discharge. However, the biggest hurdle for most student loan borrowers was completing burdensome paperwork. Since becoming president, Biden has been reforming student loan relief. This has included removing administrative roadblocks so that student loan borrowers can access student loan forgiveness more easily. . For example, during the Covid-19 pandemic, U.S. Secretary of Education Miguel Cardona waived the requirement to submit proof of income. Previously, student loan borrowers had to demonstrate that their income didnt exceed the poverty line for a three-year monitoring period. The U.S. Department of Education has committed to working with the U.S. Social Security Administration and the U.S. Department of Veterans Affairs to use data-matching to identify student loan borrowers automatically who qualify for student loan relief. This will help streamline the process of helping student loan borrowers to access student loan forgiveness. .
What Happens If I Never Pay My Federal Student Loans
If you default, the lender will turn to your cosigner, and they’ll have to begin making payments. It can also negatively impact the cosigner’s credit, and they may find it more difficult to qualify for future loans or refinance existing ones. Cosigners are quite common in the case of private student loans.
Make It A Priority To Avoid Missing Payments
Whether or not you believe you qualify for student loan forgiveness, it’s important to continue to make your monthly payments on time every month to avoid potential damage to your credit score. Remember that you’ll receive all of your payments back if you qualify for forgiveness, as long as they were made after the effective date of your disability determination.
While you’re at it, monitor your credit regularly to make sure no other issues pop up that could threaten the health of your credit.
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Student Loan Disability Discharge Eligibility
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A debilitating sickness or injury can be life-changing and make it challenging or impossible to pay back student loans. Because of this, borrowers who are considered totally and permanently disabled may qualify to have their student loans discharged through a federal forgiveness program known as Total and Permanent Disability Discharge.
Since this is a federal program, it only applies to federal student debt and not private student loans. Heres what to know about student loan disability discharge, what disabilities qualify for student loan forgiveness, and who is eligible for the program.
How Long Does It Take To Get Your Student Loans Forgiven
It varies significantly by program. Most federal loan forgiveness programs take years to dispense relief, and it could be as long as a decade, at least in the case of PSLF. Other non-federal forgiveness programs might award borrowers relief after two to three years of working in an underserved area or field. In addition, employers may offer to match or help make your monthly loan payments, in which case relief would be felt immediately and frequently.
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How To Apply For Student Loan Forgiveness For Disability
The Education Department has agreements with the Social Security Administration and the U.S. Department of Veterans Affairs that allow them to proactively determine whether you may qualify for a TPD discharge. If they determine that you may qualify, they will contact you to let you know what you need to do to request a discharge.
Please note that if you have not heard from the Education Department, you can apply for forgiveness by phone or email:
In most cases, to qualify for a TPD discharge, you must complete and submit a TPD discharge application, along with documentation showing that you meet the requirements for being considered totally and permanently disabled, to Nelnet, the servicer that assists ED with the TPD discharge process.
Other Options For Paying Student Loans
If you’re still having trouble making your monthly payments even with other forms of financial assistance, there are still options available:
- After the federal student loan repayment resumes in February 2022, file a request for additional forbearance or deferment and provide supporting documentation of your financial hardship.
- Apply for an income-driven repayment plan, which reduces your monthly payment to 10% to 20% of your discretionary income. What’s more, these programs extend your repayment term to 20 or 25 years, after which any remaining balance is forgiven.
- If you’re able to work, look into employers that offer student loan repayment assistance programs.
Refinancing your student loans could potentially help give you some more control over your monthly payments and possibly even reduce your interest rate, but you should consider it only if you don’t anticipate needing access to federal benefits like forgiveness and income-driven repayment. Refinancing federal student loans to an account with a private lender will lock you out of these benefits.
Finally, while it can be difficult to have student loans discharged in bankruptcy, it is possible in certain situations. If your financial circumstances are dire, consider consulting with a bankruptcy attorney to explore your options.
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How Do I Apply For Student Loan Forgiveness For The Disabled
Below are the steps for applying for a total and permanent disability discharge:
If you are unable to, your authorized representative can apply on your behalf by completing the Applicant Representative Designation form.
However, Disability Discharge should receive and process the form first, before your representative can apply on your behalf.
If by chance you are unable to sign the form, your representative can also sign it on your behalf. Just submit a power of attorney document.
Your Discharge Might Be Taxed
If you receive forgiveness between 2018 and 2025, you wont have to fear a big federal tax bill, due to the Trump administrations Tax Cuts And Jobs Act.
If your student loan disability discharge arrived in 2017 or earlier, youll still be on the hook for a potentially large tax bill.
One group, however, could be made exempt from this potential tax bill, as a result of the newest legislation. Borrowers who were approved for a TPD discharge in 2015, 2016 or 2017, but didnt actually receive it until the end of their three-year monitoring period in 2018 or later , could be free from Uncle Sams grasp.
If youre unsure of your situation, confirm your discharge award date with Nelnet or consult a tax professional.
If you might qualify for a student loan forgiveness disability discharge down the road, consider that Congress will have to revisit the provision, as its set to expire in 2025.
Regardless of whether your discharge is tax-free in the eyes of the federal government, consult your state governments tax authorities to learn about how it could affect your state income tax.
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Apply With Documentation From Your Doctor
You can also qualify for TPD discharge using documentation supplied by your physician.
The only physicians that can provide documentation of your disability are doctors of medicine or doctors of osteopathic medicine . They must also be licensed to practice in the United States.
Your physician needs to complete section four of the TPD application, the physician’s certification, and include any supporting documentation of your disability.
Federal Perkins Loan Cancellation
If you took out a federal Perkins loan to pay for school, you could qualify for loan cancellation in a variety of ways. The Perkins loan cancellation and discharge program typically forgives a certain percentage of student loan debt after every year of service. Over time, you could get up to 100% of your Perkins loan canceled.
Perkins loan cancellation is a popular program among teachers, as many people who work in education might qualify. You might be a teacher, librarian, speech-language pathologist or another type of education professional.
Other eligible occupations include, but arent limited to:
You might also qualify if youre in the military.
What are the requirements?
You must have a federal Perkins loan and work in a qualifying profession, and most recipients work full time for at least one year. Additional eligibility requirements vary by profession, but they often involve working in a high-need or critical shortage area.
How do you apply?
To learn more about Perkins loan cancellation and apply, speak with your loan servicer and schools financial aid office.
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Social Security Administration Documentation
If you’re eligible for Social Security Disability Insurance or Supplemental Security income, you can qualify for TPD forgiveness by providing documentation from the Social Security Administration that your next scheduled disability review is five to seven years or more from your last disability determination.
Student Loan Forgiveness For Volunteers
There are certain cases where volunteering, as opposed to part- or full-time work, could net you relief for your education debt. Though not student loan forgiveness per se, you could receive cash benefits to put toward your balances.
- Joining the Peace Corps could make you eligible for relief for PSLF and Perkins loan cancellation . You could also be awarded up to $10,000, before taxes, for two years of service in the Peace Corps, and apply some or all of that lump-sum toward your debt.
- Signing up for Americorps similarly comes with a service award equal to the amount of the Pell Grant $6,495 for 2021-22 that could be used to help pay off student loans. Your time in Americorps could also qualify for a federal loan forbearance that would temporarily pause your loan payments, though interest would accrue during the postponement.
- Volunteering to pay off student loans is also possible with other organizations, including Shared Harvest, Teach for America and the National Health Service Corps .
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Federal Employee Student Loan Forgiveness
Whether or not you qualify for PSLF, federal employee student loan forgiveness could be another option for aid. In exchange for three years of continuous service, you could receive as much as $10,000 annually for your outstanding education debt, depending on the government agency that employs you.
Employees in good standing at various federal agencies, including the Departments of Defense, Justice and State as well as the SEC.
Which loans qualify?
All federal student loans, including Perkins and federal family education loans, are eligible.
How do you apply?
Talk to your current or prospective agencys human resources department.
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.
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What Disabilities Qualify For Student Loan Forgiveness
#1 Student Loan Lawyer
Federal student loan borrowers qualify for student loan forgiveness if they suffer from any mental or physical disability that is severe, permanent and prevents them from engaging in substantial gainful activity. Proof of the disability can come from a doctor, the SSA, or VA.
Borrowers with disabilities can have their student loan debt discharged if a permanent physical or mental impairment prevents them from working. The Department of Education accepts proof of your disability from a doctor, the Social Security Administration, or the Department of Veterans Affairs. Some private lenders may rely on the same information.
Ahead, learn what disabilities qualify for student loan forgiveness and how to apply for a total and permanent disability discharge.
Latest on student loans
Covid-19 forbearance extended: The newest student loan payment pause moved the repayment start date to May 2, 2022.
New deadline: The latest coronavirus pandemic forbearance moved the student loan recertification deadline to August of 2022.
The Department Of Education And Va Will Now Coordinate To Eliminate All Paperwork Required For Disabled Veterans To Qualify Student Loan Forgiveness
On Thursday, President Trump announced that he has directed the Department of Education to implement new rules that will make it easier for Veterans to qualify for student loan forgiveness due to a Total and Permanent Disability . In fact, under the new system, all Veterans who qualify for TPD status through the U.S. Department of Veterans Affairs will automatically have their student loan balances discharged.
Student Loan Discharge Programs
Closed school discharge. You may qualify for loan discharge if your school closes. At the time of closure, you must have been enrolled or have left within 120 days, without receiving a degree. If you qualify, contact your loan servicer to start the application process. Youll need to continue making payments on your loan while your application is being processed. If youre approved, you will no longer have to make loan payments and you may be refunded some or all of the past payments you made on the loan.
Borrower defense to repayment discharge. Borrowers defrauded by their colleges may qualify for debt relief. Youll need to file a borrower defense to repayment claim with the U.S. Department of Education. If you qualify, you may have your loans automatically discharged, at the discretion of the Education Department, if your school was involved in clear, widespread fraud or misrepresentation that affected a broad group of borrowers.
Total and permanent disability discharge for veterans. Veterans who are totally and permanently disabled will have their student loan debt discharged. The process will be automatic unless they decline due to potential state tax liability .
Discharge due to death. If you die, your federal loans will be discharged once a death certificate is submitted to your loan servicer. Your parents PLUS loans used to pay for your schooling will be discharged if the parent who holds the loan or you die.
The Higher Education Relief Opportunities For Students Waiver
The HEROES Waiver was written to ensure military service members could complete their service without jeopardizing their academic or financial future. The HEROES Act has several implications for service members and veterans in school or repaying student loans but prevents service members from incurring additional student debt while deployed. Contact your lender and your schools financial aid department to learn more about how the HEROES Act waiver could benefit you.
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No New Federal Student Loans Or Teach Grants
If the borrower returns to college during the 3-year post-discharge monitoring period, the loans and TEACH Grant service obligation will be reinstated. The borrower will be required to resume repayment of the previously discharged loans and acknowledge that they are once again responsible for completing the TEACH Grant service requirements.
Even after the post-discharge monitoring period, the borrower cannot receive new federal student loans or TEACH Grants unless a doctor certifies that the borrower is able to engage in substantial gainful activity.
The borrower must also sign a statement that acknowledges that they cannot get another TPD discharge based on their current disability unless the disability deteriorates.
How Is This Different From Current Student Loan Forgiveness Rules
Under current rules, Veterans and civilians who qualify for student loan forgiveness due to a Total and Permanent Disability must file paperwork with their federal student loan servicers in order to have those balances discharged. Veteran advocacy groups have rightly complained that the procedure is too cumbersome for Veterans who suffered a severe disability during their service.
Currently, the White House estimates that there are 50,000 disabled Veterans in the country that are eligible for permanent disability student loan forgiveness. However, only roughly 22,000 Veterans have applied for TPD student loan forgiveness.
Under the new rules, all Veterans who receive TPD status from the VA would automatically be identified by the DoED for student loan forgiveness. The DoED would send them a letter letting them know they are eligible for forgiveness unless they decide to opt-out. If they dont opt-out within 60 days, all federal student loan balances would be forgiven.
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Use Chipper For Public Service Loan Forgiveness
The Public Service Loan Forgiveness program was created to provide relief to borrowers aiding the public sector. Unfortunately, 30% of applicants are denied due to incorrect paperwork. We can help! Chipper was created to solve this issue by assisting borrowers in understanding their options as well as allowing forgiveness eligible users enroll into the best forgiveness program available. to see your student loan forgiveness options and get the forgiveness you deserve.
Student Loan Forgiveness For Disability: How To Discharge Debt
Editorial Note: The content of this article is based on the authors opinions and recommendations alone. It may not have been reviewed, commissioned or otherwise endorsed by any of our network partners.
When you take out student loans, you trust that youll eventually make enough money to pay them back. But what if youre struck by a sudden illness or are involved in an accident that leaves you unable to work? This is where student loan forgiveness for disability comes in.
You may already be aware that this form of relief is out there, but the good news is that its become more accessible than ever before, not to mention tax-free .
Heres what you need to know about the student loan disability discharge:
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