The U.S. Department of Education recently announced a new process to identify and assist borrowers with disabilities who may be eligible for Total and Permanent Disability (TPD) federal student loan discharge. More information about qualifications and the application process can be found by clicking here. You can also read the April 12, 2016 Press Release by clicking here. This is not new program, but rather a new process for a program instituted in 2012. Apparently, the agency did not get the word out to borrowers or did a poor job at administrating the process (after all, it is the government!). “Under the new process, we will notify potentially eligible borrowers about the benefit and guide them through steps needed to discharge their loans, helping thousands of borrowers. Americans with disabilities have a right to student loan relief. And we need to make it easier, not harder, for them to receive the benefits they are due.” Note that this program does not include private student loans.
According to the press release the general process will be the following:
Beginning on April 18, 2016, borrowers who were positively identified in the match will receive a customized letter explaining that the borrower is eligible for loan forgiveness and the simple steps needed to receive a discharge. Unlike other borrowers, those identified through the data match will not be required to submit documentation of their eligibility. Instead, they are eligible for a streamlined process by which they simply sign and return the completed application. Initial notification letters will be sent over a sixteen-week period and will be followed up with a second letter that will be sent 120 days after the initial letter if a signed application is not received. Notification will also include information to ensure borrowers understand the potential tax implications for this benefit and can make an informed decision about electing a discharge.
Yes, I know the “simply sign an application with no documentation” process always has many problems all the way around (think real estate loans in the 90’s and 2000’s, and even student loans). If you or someone you know might qualify under this program, I suggest you still gather documentation of the disabilities to provide with the application if possible.
From the program website, here are the guidelines for showing a disability:
You can show that you are totally and permanently disabled in one of the following three ways:
1 – If you are a veteran, you can submit documentation from the U.S. Department of Veterans Affairs (VA) showing that the VA has determined that you are unemployable due to a service-connected disability;
2 – If you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can submit a Social Security Administration (SSA) notice of award for SSDI or SSI benefits stating that your next scheduled disability review will be within 5 to 7 years from the date of your most recent SSA disability determination; or
3 – You can submit certification from a physician that you are totally and permanently disabled. Your physician must certify that you are unable to engage in any substantial gainful activity by reason 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.
Each option for showing that you are totally and permanently disabled has specific requirements for the supporting documentation that you must submit with your TPD discharge application. To review the supporting documentation requirements, click here.
If you believe you may qualify, or are assisting someone who may qualify, start with the website linked above, gather all documentation (including available medical records) and begin the application process. As if often the case for federal student loans, programs like this are often much better than trying to get a discharge of student loans in Bankruptcy.