If you are receiving social security disability benefits, you may be eligible to have your federal student loans canceled through the “Total and Permanent Disability” discharge. This discharge means that you don’t have to repay your federal student loans. According to the Department of Education, 365,000 borrowers were eligible for a loan discharge but did not get relief. If you are eligible, you should take advantage of this student loan discharge.
Who is Eligible for a Discharge?
To be eligible for a discharge, you must be totally and permanently disabled. A total and permanent disability can be shown in three ways.
- You are a veteran and have a service-connected disability that the VA determined was 100% disabling or you are totally disabled based on an individual unemployability rating.
- The Social Security Administration determines that you are eligible for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits and your next scheduled disability review will be within 5 to 7 years from the date of your most recent SSDA disability determination.
- An M.D. or D.O. who is licensed to practice in the United States has certified that you are totally and permanently disabled. Your physician must certify that you are unable to engage in any substantial gainful activity because of a medically determinable physical or mental impairment that can be expected to result in death, has lasted for a continuous period of not less than 60 months, or can be expected to last for a continuous period of not less than 60 months.
What Loans are Eligible for a Discharge?
A Total and Permanent Disability discharge relieves you from having to repay a:
- William D. Ford Federal Direct Loan (Direct Loan) Program loan
- Federal Family Education Loan (FFEL) Program loan
- Federal Perkins Loan (Perkins Loan) Program loan
- TEACH Grant service obligation
How Can You Discharge Your Loans?
To discharge your loan, you will need to complete a discharge application and send it to Nelnet, the loan discharge servicer. This application can be done online. Click here to find the online application.
Along with your application, you will need to provide documentation to establish your disability. You can satisfy this obligation by providing a copy of your SSA Notice of Award showing that your next scheduled disability review will be five to seven years or more from the date of your last SSA disability determination.
In some cases, the Notice of Award does not contain information indicating the length of your period of review. If you do not know that your disability review will be five to seven years, you can find that information by obtaining a Benefits Planning Query. The Benefits Award Query can be obtained in-person at your local SSA office or via phone at (800) 772-1213. In our experience, our clients have the most success reaching the 800 number later in the day, closer to 7 PM.
Once NelNet receives your application, they will contact the holders of your federal student loans and instruct them to suspend collection activity on your loans while they determine your eligibility for discharge. You will not need to make any payment on your loans while your discharge application is being reviewed.
Monitoring Period
After your loans are discharged, you will be subject to a three-year monitoring period that begins on the date the discharge is approved. The obligation to repay your discharged student loans will be reinstated if:
- You have annual employment earnings that exceed the Poverty Guideline amount for a family of two in your state;
- You receive a new federal student loan; or
- You receive a notice from SSA stating that you are no longer disabled or that your disability review will no longer be the 5-year or 7-year period indicated in your most recent SSA notice of award
During these three years, Nelnet will require you to submit documentation of your annual earnings from employment on a form that Nelnet will provide. If you don’t submit this form with the required documentation of your income, your obligation to repay your loans will be reinstated. For more information about the monitoring period, please click here.
Will This Affect Your SSDI or SSI Benefits?
Discharge of your federal student loans does not affect the benefits you receive.
For more information about the discharge process and the discharge application, click here.
