If You're Unable to Work Because of a Disability: What Happens to Your Student Loan?
If you get sick or injured and are unable to work after graduating from college, your student loan doesn’t go away automatically. But there is some relief for people who have this issue. The federal government offers a total and permanent disability (TPD) discharge that gives loan forgiveness to those who meet its requirements. Here’s a look at how it works—and how you can qualify.
What types of loans qualify for a discharge?
The types of loans that are eligible for discharge under this program include:
- Federal Direct Loans
- Federal Family Education Loans (FFEL)
- Perkins Loans
- TEACH grant service obligations
People eligible for a discharge include both students and graduates themselves, and parents or guardians who have taken out a loan to pay for a child’s education.
How do I prove that I qualify?
You will need to provide documented proof that supports your claim of being totally and permanently disabled. There are basically three overarching categories of proof that the government will look at when it comes to granting total disability waivers for student loans. Here’s an overview:
For veterans. If you are a military veteran, the US Department of Veterans’ Affairs can provide you with documentation that states it judges you unable to work because of a disability you incurred during your service.
For those receiving Social Security benefits. If you are already receiving Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI), the Social Security Administration can provide you with a notice of award of these benefits. It should state that you will receive a scheduled disability review within five to seven years of your most recent evaluation for SSA disability benefits.
For non-veterans and those not on Social Security. If you fall under this category, you will need to ask your doctor to complete Section 4 of the TPD application stating that you are unable to work because of either a physical or mental disability that falls under one of these categories:
- The condition is fatal;
- It has lasted for at least 60 months continuously; or
- It is predicted to last for at least 60 months in the future.
For each of the categories listed above, there are different requirements for submitting documentation. You can find more specific information by visiting the government disability discharge website.
How do I apply?
You can apply for a total permanent disability waiver by completing the online application, or by calling the Nelnet Total and Permanent Disability Sevicer at 1-888-303-7818. You can also email them at firstname.lastname@example.org.
Once you start the process—either online or over the phone—the Nelnet organization will provide you with the directions you need to apply for a discharge under your specific situation. It will also review your loan history and identify all loans you have that qualify for a potential discharge under your program.
Once it has identified which of your loans qualify, Nelnet will get in touch with your lenders and direct them to stop any collection activity on your loans for as many as 120 days. During this period, you will not have to make payments on your loans—and you will have time to assemble the documentation you need to qualify for a discharge.
What if I am not able to complete the application myself?
If your disability prevents you from completing the application process, you can have a representative apply on your behalf. The representative will need to complete an Applicant Representative Designation form, however, and Nelnet will need to process this designation before your representative will be able to help you through the application process.
If your representative already has a power of attorney, they still need to complete the form. Click here for the Applicant Representative Designation form.
What happens once my loan is approved?
Once your discharge request is approved, your lender may be required to return any payments you sent in on or after the date of your disability. You will also be monitored for a three-year period beginning on the date of your approval.
During this period, if you receive an income that is over the federal poverty rate for your area, receive a notice from the Social Security Administration stating that you are no longer considered disabled, or fail to fulfill other requirements, you could have your loans reinstated.
For more information about the monitoring period, click here.
If your application is denied, your lender will start collecting on your loans again. Nelnet should send you a letter stating the reason for your denial, and instructions for appealing the decision if you have further relevant information.
Paying a student loan for a traditional or accredited online degree while suffering under a serious illness or injury can be a hardship for anyone. But there is some relief if you can qualify for a discharge from the federal government. Follow the instructions or ask your representative to do it for you, and you may find you qualify to have your loans discharged.
More About Understanding Student Loans
- Credit Repair Services You Should Never Pay For
- Questions You Should Ask Before Applying for Student Loan Forbearance
- The Bank on Students Act: What It Is, and How It Could Help Student Borrowers
- How the Death of a Co-Signer Can Affect Your Student Loan
- Peer-to-Peer Student Loans: What They Are, and How They Can Help You Pay for College
- If You're Unable to Work Because of a Disability: What Happens to Your Student Loan?
- New Rules for Debt Collectors: How They Could Affect Your Student Loan
- Having Trouble Repaying Loans? The Department of Education May Be in Touch