Simplified TPD Discharge: Faster Cancellation
Thousands of student borrowers have been able to cancel their debt through the federal Disability Discharger program. If you are permanently unable to work, you may qualify to have your student loans cancelled.
Adjusting to life after an accident or chronic illness is difficult, especially if it interferes with your capacity to work and make a living. This stress is one of the reasons that disabled student loan borrowers can get behind on payments, default, and go into delinquent – even though there are choices to help them avoid these repercussions.
If you are temporarily unable to work due to an injury or sickness, resulting in difficulty making your monthly student loan payments, seek assistance as soon as possible to discuss alternatives for lowering or pausing your payments. For all borrowers who are having difficulty repaying, there are many repayment choices, including options that might reduce your monthly payment to zero if your income is low enough.
If your medical condition is permanent, you may be eligible for a complete and permanent disability (TPD) discharge, which allows you to have all or part of your federal student loans forgiven. Direct loans, some Federal Family Education Loans, Perkins loans, and TEACH Grant service commitments may be eligible for TPD discharge. A comparable option is available with many private student loans.
Many people who are eligible for a TPD discharge of their federal student loans will have their loans automatically canceled over the coming months. If you believe you may qualify but have not obtained an automatic discharge yet, you can attempt to have your loans canceled by submitting proof that you are unable to work or earn an income as a result of a disability or sickness that is not expected to improve.
You must meet one of the following criteria to be eligible for a TPD discharge on a federal student loan:
- The Department of Veterans Affairs, or VA, certifies that you are completely unemployable, either because of a service-connected disability or because of an individual unemployment rating.
- Eligibility for Social Security Disability Insurance or Supplemental Security Income benefits, with a review date of no less than five to seven years after your most recent SSA disability finding.
- Certification from a physician that you are totally and permanently handicapped, which implies you are “unable to engage in any substantial gainful activity” due to a mental or physical impairment that has persisted for at least 60 months or can be expected to last for at least 60 months.
Thousands of student borrowers have been able to cancel their debt through the federal Disability Discharger program. If you are permanently unable to work, you may qualify to have your student loans cancelled.
Adjusting to life after an accident or chronic illness is difficult, especially if it interferes with your capacity to work and make a living. This stress is one of the reasons that disabled student loan borrowers can get behind on payments, default, and go into delinquent – even though there are choices to help them avoid these repercussions.
Automatic TPD Discharge
Adjusting The VA and the SSA use a data matching system to assist the US Department of Education in determining whether borrowers are eligible for an automatic TPD discharges, based on their status. When a borrower qualifies for this discharge, the Education Department is notified and can forgive student loans and/or the TEACH Grant service obligation Immediately. This means that most students who qualify will not have to apply for a TPD discharge.
- Regardless of payment status, any month in repayment status
- Any month before consolidation that is eligible for repayment, deferment, or forbearance
- Months spent being patient (12 months consecutive or 36 cumulative)
- Any month prior to 2013 that was spent in deferment (with the exception of in-school deferment)
The automatic discharge process is new. Until recently, all borrowers were required to submit a discharge application, even if they were identified using the data matching technology. Because many borrowers were unable to receive relief due to their inability to apply, the agency began automatically forgiving federal student loan debtors identified by the VA in 2019 and removed the application requirement. This strategy was broadened to cover borrowers recognized by the Social Security Administration (SSA) this year.
Borrowers who are eligible for automatic discharge will receive a notice of approval and the option to opt out, but they will not be required to do anything if they want their loans to be forgiven.
How to Apply for TPD Discharge
To apply for a TPD discharge, the borrower should submit an application with the required information to their loan holder. For most federal student loans, your loan holder is the Department of Education, but for private student loans or older FFEL program loans you should check with the lender for more information about the process and eligibility requirements.
If you need help or have questions regarding this process, feel free to contact TitanPrep.com
Loan discharges for borrowers who have made 20 or 25 years of payments will begin in November 2022. For borrowers who have been pursuing loan forgiveness for a long time, this is a crucial step. Additionally, in July 2023, the identical payment count treatment will be automatically implemented, giving borrowers assurance that their payments are being correctly counted.
The Department of Education is working to improve the PSLF regulations over time in addition to the one-time executive actions. With certification of eligible employment, borrowers will be able to obtain credit for overdue, partial, and lump sum payments thanks to the improvements that will be codified in the final regulations. Additionally, with proof of acceptable employment, borrowers will be given credit for any months spent in deferment or forbearance (military service, financial hardship, cancer treatment). On July 1, 2023, these rules will be released and come into force.
The Biden-Harris Administration’s broader initiatives to help struggling borrowers are included in this most recent round of debt relief. 40 million qualified borrowers will receive $20,000 in debt relief, as President Biden has already announced. Additionally, student loan relief totaling more than $38 billion has already been authorized.
For borrowers who have been struggling with student loan debt, the U.S. Department of Education’s one-time executive actions and long-term improvements to the PSLF regulations are a huge victory. The IDR and PSLF will be credited to borrowers with Direct Loans or FFEL loans, giving them much-needed relief and a path toward loan forgiveness. Borrowers can take charge of their financial futures and leave their student loan debt in the past by utilizing these advantages and the Department’s suggested steps.
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