Pursuing education with a permanent disability poses its own set of unique hurdles, especially in the face of massive student loans. Fortunately, there are federal programs specifically designed to help students obtain student loan forgiveness.
Total and Permanent Disability (TPD) Discharge is a student loan forgiveness initiative designed to alleviate the financial burden of disabled individuals. Approval for TPD allows disabled individuals to continue receiving Social Security Disability Insurance (SSDI) benefits. However, individuals must meet specific program criteria to qualify for TPD discharge.
Continue reading to learn more about student loan forgiveness and SSDI benefits.
SSDI and Student Loan Forgiveness
The federal government of the United States sponsors loan forgiveness programs in order to lessen the financial strain that student loan debt can have on permanently disabled people.
The TDP discharge is one example of a loan forgiveness program designed to provide financial assistance to persons unable to work due to their disability.
In order to be eligible for TPD discharge, one must fulfill certain requirements.
One such requirement is that a disabled person must not participate in substantial gainful activity due to a medically determinable physical or mental disability that is expected to last for a continuous period of at least five years or result in death.
Social Security Disability does not consider TPD discharge as income. Thus, the amount of the loan that is forgiven will not have any impact on an individual’s eligibility for SSDI benefits or the amount they receive.
The TPD Discharge Program allows disabled people to gain financial freedom. Once beneficiaries are freed from their student loan obligations, they can put their income toward fulfilling more crucial needs.
Eligibility Criteria for TPD Discharge
Individual eligibility for TPD depends on the definition of total and permanent disability outlined by TPD. The program’s TPD requirements are in line with the Higher Education Act of 1965.
The eligibility requirements for a TPD discharge are similar to those that the Social Security Administration employs for disability benefits, but the requirements for a TPD discharge are significantly more difficult to fulfill.
Additionally, while it does help strengthen your claim, approval for Social Security disability benefits does not always guarantee approval for TDP discharge.
To be eligible for a TPD discharge, you must meet the following criteria:
- You must not be able to engage in any ‘substantial gainful activity’ (work that requires significant mental and/or physical activities).
- Your inability to engage in substantial gainful activity is due to a ‘medically determinable’ mental or physical condition that has lasted for sixty months.
- The condition is expected to continue for sixty months, result in death, or be entirely connected to military service.
The definition of disability that is used by Social Security differs from this one in two important ways.
First, in order to qualify for Social Security disability benefits, you must meet the program’s criteria, and according to the Social Security Administration (SSA), a qualifying disability is:
- A medically determinable, documented mental or physical impairment
- The impairment results in the inability to engage in any substantial gainful activity
- The impairment can be expected to result in death, has lasted, or can be expected to last for a minimum of 12 months.
If the SSA designates your condition as “Medical Improvement Not Expected” (MINE) and your Social Security disability award has a five-to-seven-year review date, you should automatically be eligible for a discharge of your federal loans.
This is because the SSA has determined that, given the circumstances of your case, your condition is not expected to improve, thus fulfilling the five-year threshold requirement for the TPD discharge.
Applying for Total and Permanent Disability Discharge
It is no longer necessary for you to submit a student loan forgiveness application if you are currently receiving disability benefits from Social Security. The Department of Education of the United States conducts a data match with the Social Security Administration and the Department of Veterans Affairs on a quarterly basis.
Debtors who are eligible for a discharge will get a notice from the Department of Education informing them that their loans have been forgiven.
If you do not meet the requirements for Social Security or veterans disability benefits due to technical reasons, you are required to submit an application for a discharge.
In order to complete the application, your physician is required to fill out a section that includes your diagnosis, the severity of your condition, and the restrictions that your condition has imposed on your life.
If your physician confirms that you are totally and permanently disabled and provides evidence that your disability has or is expected to last for five years or could result in death, then you may still be eligible for a TPD discharge even if you are not receiving benefits from Social Security or the Veterans Administration.
The SSA requires medical evidence from licensed physicians in the United States, either as a doctor of medicine (M.D.) or as a doctor of osteopathy/osteopathic medicine (D.O.).
Types of Loans Qualifying for TPD Discharge
The Total and Permanent Disability Program can discharge student loans obtained through the William D. Ford Direct Loan Program. This loan program allows eligible students and their parents to borrow money directly from the Department of Education.
Other loan programs, such as the Federal Perkins Loan (FPL) and the Federal Family Education Loan (FFEL), were also previously forgiven by TPD discharges. However, these loan programs have now been terminated.
The Federal Family Education Loan Program, which collaborated with commercial lenders to provide loans insured by the government, came to an end in 2010. The Federal Perkins Loan (FLP) provided low-interest loans to students who had “exceptional” financial needs. Unfortunately, this program was also terminated in 2017.
Individuals who receive support from the Teacher Education Assistance for College and Higher Education (TEACH) Grant are also eligible for assistance from TPD in forgiving their service obligations.
Those students who are eligible for a TEACH Grant can receive up to $4,000 annually from the federal government. In exchange, they are required to fulfill a “service obligation.”
TEACH grants require recipients to teach for four years at an elementary school, middle school, high school, or educational service agency for children from low-income backgrounds. The grant becomes an unsubsidized loan if the recipients fail to meet these requirements.
Forgivable Student Loan Debt Amount
The amount of your forgivable debt will be determined based on whether or not you received a Pell Grant. Students who were eligible for a Pell Grant can have up to $20,000 of their loans forgiven.
If your outstanding student loan balance is lower than the maximum relief amount, you will not be provided with further funding. Relief will only be granted up to the actual amount of your outstanding debt. For instance, if you qualify for $10,000 in relief but have an outstanding student loan balance of $7,000, you will only receive $7,000 in relief.
How Will I Be Notified About Student Loan Forgiveness?
You will get confirmation that your loans have been canceled or that your TEACH Grant service commitment does not need to be completed if the Department of Education confirms your qualification for a TPD discharge.
Additionally, you will be refunded for any loan payments that you made after the day your disability certification went into effect.
It is important to keep in mind that you will be subject to a monitoring period of three years if you become eligible for the program as a result of the Social Security Administration’s documentation or a physician’s certification.
Your obligation to repay a loan or grant will be resumed if you fail to meet specific requirements at any point within this term. It is possible for reinstatement to take place if any of the following take place during the period of three years:
- The poverty line in your state is less than the amount you earn each year from work for a two-person household.
- You are awarded either a new TEACH Grant or a new federal student loan under the direct loan program.
- The Department of Education receives notification from the Social Security Administration that you are no longer disabled or your next scheduled disability review will not be five to seven years from your last determination.
- You receive a second payment from a direct loan or TEACH Grant that was initially transferred to you before your loan discharge, and you fail to return it within 120 days.
Options for Disabled Individuals Who Don’t Qualify for Loan Discharge
If you are unable to qualify for a TPD discharge but are still having trouble making your monthly payments due to your condition, there are payment support programs that can help with other parts of your budget. These programs include:
- Medicaid: Medicaid can help individuals from low-income backgrounds pay for some of their medical expenses.
- Housing Choice Voucher Program (also known as Section 8): You may be eligible for assistance in paying a portion of your rent through the Housing Choice Voucher Program.
- Housing Choice Voucher Homeownership Program: The Housing Choice Voucher Homeownership Program can cover some of the costs associated with housing
- The Supplemental Nutrition Assistance Program (SNAP): SNAP, which was initially known as the Food Stamp Program, helps families with low incomes meet their nutritional requirements. Disabled individuals may be eligible for higher Supplemental Nutrition Assistance Program benefits.
There are also other organizations, such as the National Disability Institute, the Disability Rights Legal Center, and the National Disability Network, that can help you obtain the required financial support.
Alternative Ways to Pay Student Loans
If you are still having problems paying your monthly payments despite receiving various forms of financial aid, you have the following options:
- You can ask for more time to pay or defer payments by submitting paperwork proving your financial difficulties
- You can reduce your monthly payment to 10% to 20% of your discretionary income by applying for an income-driven repayment plan. These plans also allow your repayment period to be extended to 20 or 25 years, after which any debt that is still outstanding will be forgiven.
- If you can work, research companies that might be able to help you pay off your student loans.
Debtors who do not expect to qualify for federal loan forgiveness or income-driven repayment programs should carefully consider refinancing their student loans in order to gain control over their monthly payments and, in certain cases, lower their interest rates.
If you refinance your federal student loans into an account with a private lender, you will no longer be eligible for these benefits. Some circumstances can also allow you to have your student debts erased in bankruptcy. However, this is an unlikely scenario.
What to Expect After TPD Approval/Denial
If the program decides to approve a TPD discharge application, a notification will be sent to loan holders requesting that they refund any loan payments that were made on or after the applicant’s disability date.
When it comes to documentation from the Department of Veterans Affairs (VA), the “disability date” is the date that the VA established the individual’s TPD.
If an individual is applying with documentation from the Social Security Administration, the term “disability date” refers to the date that the TPD discharge program received the paperwork from the SSA that confirmed the individual’s disabilities. After the application has been approved, the applicant will be notified of their acceptance via a letter from the program.
It is important to note that unless the VA has accepted the student, they will be required to pay back their loans if they do not complete the TPD requirements during the three-month monitoring period.
If students do not qualify for the TPD discharge program, they will also be notified via letter. Loanholders will also be notified to resume collection efforts.
Conclusion
Both SSDI and VA benefits beneficiaries are eligible to apply for student loan forgiveness through the TPD program. In fact, applying through the SSA with the necessary documentation can help expedite the process and increase the likelihood of approval.
