TPD Discharge for Federal Student Loans

When individuals suffering from disabilities come to us with questions about their Social Security Disability application, many wonder how federal student loans will be affected if they are deemed eligible for the program.

The good news is, if an individual has federal student loans, they may be cancelled if “total and permanent disability” (TPD) is ruled in his or her case. This “TPD discharge” applies to the following loans:

• William D. Ford Federal Direct Loan Program loans
• Federal Family Education Loan (FFEL) Program loans
• Federal Perkins Loans
• Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligations

These loans (along with others that have different rules) can be excused if the individual meets certain requirements very similar to the SSA’s determinations. However, being eligible for Social Security Disability benefits does not mean one’s student loans will automatically be excused. In fact, the TPD discharge is often more difficult to obtain. The following rules must be met:

• The individual must be medically declared physically or mentally unable to perform any “substantial gainful activity”.
• This physical or mental impairment must have lasted for a period of 60 months, be projected to last for 60 months, be expected to result in death or be the result of a 100% military-service-connected disability.
• Those classified by the SSA with a MINE designation (Medical Improvement Not Expected) should automatically qualify for federal loan discharge as this means their review is not for five to seven years.

Once you are deemed eligible for TPD discharge, there are some things you need to know. First of all, you will likely be taxed for the loan amount. Your income will be monitored for a period of three years, and if you earn over your state’s poverty guidelines for a family of two, you may have to repay the student loan after all. If you plan on going back to school in the future, federal student loans may be harder to secure, and applying for student loans within three years of your discharge may mean you have to repay the discharged student loan.

If you believe you may be eligible for a TPD discharge, you can fill out a TPD Discharge Application. Note that this includes a detailed section for your doctor to complete. Next, this application will go to your loan servicer—one application for each loan holder.

The West Virginia Social Security Disability Lawyers of Jan Dils, Attorneys at Law, can help you build a solid case and get you the benefits you deserve. You can call us toll-free at 1.877.526.3457 or send us an e-mail to schedule your free initial consultation today.