How to Get Rid of a Student Loan on Disability

Any borrower unable to work due to a medically diagnosed physical or mental disability may apply for a "Total and Permanent Disability Discharge." The disability must be such that it lasts or has lasted for a period of five years or more and may lead to the death of the borrower. A veteran must have a 100 percent service-connected disability or be unemployable based on a Department of Veterans Affairs individual unemployability determination.

Instructions

1. Obtain a Total and Permanent Disability application from the Total and Permanent Disability Discharge website or the Department of Education ombudsman's website. Or contact the Department of Education to receive the application by mail.

2. Enter the borrower's Social Security number, name, address and contact information in "Section 1" of the application. Use blue or black ink if entering the information by hand. Read "Section 2." Sign and date "Section 3."

3. Ask a physician to certify the borrower's disability in "Section 4." The physician must list the type and limitations associated with the disability. The certifying physician must also list physician type, licensed state of practice and professional license number.

4. Mail the application and supporting documentation to each loan holder within 90 days from the date the physician certifies the disability. Some loan holders may accept faxed applications. Be sure to keep a personal copy of the application and documentation.

5. Return any disbursements received on or after the physician certification date. If the borrower receives a loan disbursement on or after the physician certification date, the application review halts until the borrower returns the funds to the loan holder or Department of Education.

6. Allow time for an application review. The loan holder makes a determination based on the physician certification and supporting documents. The loan holder transfers the loan to the Department of Education, provided the borrower meets the disability requirements. Once the department assumes the loan, an additional review occurs. If the department concludes that the borrower meets the requirements, the borrower receives a discharge. If the department deems the borrower ineligible, payments must resume.

7. Understand the responsibilities associated with a discharge. The education department conducts a three-year monitoring period from the date of discharge. The borrower must notify the department when annual employment earnings surpass the Health and Human Services Poverty Guidelines for a household of two. The borrower must notify the department when an address or phone number changes. The department may request verification of annual earnings during the three-year period. As of August 2011, borrowers residing in one of the 48 contiguous states or the District of Columbia may not earn more than $14,710 annually. Income for borrowers in Alaska cannot exceed $18,380, or $16,930 for borrowers in Hawaii.

References

• Department of Education: Total and Permanent Disability: For Borrowers
• Department of Education: Total and Permanent Disability: Veterans Disability Discharge
• Office of the Ombudsman: Cancel or Discharge a Loan
• Department of Education: Discharge Application: Total and Permanent Disability
• Disability Discharge: Understanding the TPD Process
• Disability Discharge: Poverty Guidelines: The 2011 Health & Human Services Poverty Guidelines