NPR Michigan Radio’s Clare Lombardo reported in December that roughly 365,000 student loan borrowers were identified as possibly being eligible for loan discharge as a result of permanent disabilities that keep them from employment (1). These borrowers, however, have not gotten their due loan relief.
This most often happens because they aren’t aware they could get their loans discharged.
The truth is that for roughly 50 years, student loan borrowers with significant, permanent disabilities have had the option of asking the U.S. Department of Education to erase their student loan debt. This is referred to as total and permanent disability (TPD) discharge (2). It can allow the individual to be relieved from repaying the following student loans (2):
- Federal Family Education Loan (FFEL) Program loan
- William D. Ford Federal Direct Loan (Direct Loan) Program
- A TEACH Grant service obligation
- Federal Perkins Loan
But because so many people don’t know this fact, only about 28% of eligible borrowers identified in the last three years have had their loans erased or are in the process of having them erased (1).
What is required to apply for TPD loan discharge?
In order to qualify for TPD student loan debt discharge, you must do the following (2):
- Submit TPD discharge application
- Submit documentation that shows you meet the requirements for being considered totally or permanently disabled (documentation must come from a physician, the U.S. Department of Veteran Affairs (VA), of the Social Security Administration (SSA))
According to the Michigan Radio analysis of the TPD loan discharge, advocates revealed two major issues with TPD loan discharge:
- The Department of Education isn’t doing enough to inform people of the potential for loan discharge
Studies in 2015 and 2016 found that 365,000 student loan borrowers have not been relieved of their student loans even though they should have been (1). As a result, in 2016, the U.S. Department of Education started sending letters to those found eligible that informed them of the TPD loan discharge. These efforts, though helpful, may have been lost, because according to a 2018 investigation, their borrower records are often outdated (1). Additionally, the way that the Social Security Administration categorizes disabilities may have kept some eligible borrowers from being identified. Another notable truth is that people with disabilities may not be opening their mail, may be unable to organize the paperwork necessary to apply for TPD discharge, or may assume the letter of notification is a scam.
2. The process is very taxing
The article also reveals that, even for people who are eligible for the TPD loan discharge, the process is a complex one, involving (1):
- Applying for TPD loan discharge
- Being approved for TPD loan discharge
- Completing a three-year monitoring period, during which they must submit annual paperwork regarding income
Individuals with significant, permanent disabilities may struggle with organizing and completing the necessary paperwork and follow-up information required.
Why can’t the Department of Education just confirm an individual’s eligibility and mail them a letter telling them they have been discharged? That is the question of the hour at Michigan Radio.
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- Lombardo, C., & Turner, C. (2019, December 4). Student Loan Borrowers With Disabilities Aren’t Getting Help They Were Promised. Retrieved December 27, 2019, from https://www.michiganradio.org/post/why-student-loan-borrowers-disabilities-arent-getting-help-they-deserve.
- Total and Permanent Disability Discharge. (2019, November 27). Retrieved December 27, 2019, from https://studentaid.gov/manage-loans/forgiveness-cancellation/disability-discharge.