Student Loan Forgiveness for Disabled Veterans
Totally disabled veterans may qualify to have federal student loans forgiven under a Department of Education (DOE) program.
In 2021, the DoE announced a plan to forgive federal student loans for those rated as totally disabled, whether veteran or civilian. There are more than 300 thousand student loan borrowers with a total and permanent disability, including military veterans and military family members.
According to a DoE press release, nearly $6 billion in federal student loans are discharged “automatically” for “borrowers who are identified through an existing data match with the Social Security Administration (SSA).”
The Department of Education began providing automatic TPD discharges “for borrowers who are identified through administrative data matching” which occurs on a scheduled basis (it’s not ongoing.)
Qualifying for a Total and Permanent Disability Discharge
If you are officially rated as totally and permanently disabled, you may qualify for a discharge of your federal student loans, according to the Federal Student Aid official site. You may also qualify for a discharge of your obligations under the Teacher Education Assistance for College and Higher Education (TEACH) Grant program.
The Federal Student Aid official site notes you qualify for a TPD discharge “by providing documentation from either the Department of Veterans Affairs, the Social Security Administration, and/or a doctor or other “authorized medical professional.”
Related: Ultimate GI Bill Guide
Automatic Every Time?
Automatic discharges may not happen for all borrowers; depending on circumstances (see below), you may need to submit additional documentation before benefitting from the program.If your medical records or other qualifying data were not current during the latest round of data matching, you may need to update your records or wait for recently updated information to be added to the system.
If you feel you qualify for the program but have not received an automatic discharge of your student loan, fill out a formal application and submit to the U.S. Department of Education at the address provided on the application.
How the Student Loan Discharge Program Works
What happens when borrowers are matched with approval for a student loan discharge?
According to the DoE records are checked for qualifying information. When there is a match, “Borrowers will receive notices of their approval for a discharge in the weeks after the match,” which happens on a scheduled basis, “and the Department expects that all discharges will occur by the end of the year. Borrowers who wish to opt out of their discharge for any reason will have an opportunity to do so.”
Which Student Loans Qualify for a Discharge?
- William D. Ford Federal Direct Loan (Direct Loan) Program loans
- Federal Family Education Loan (FFEL) Program loans
- Federal Perkins Loans
How Veterans Qualify for the Program
Veterans qualify for this federal student loan forgiveness by providing VA and/or DoE documentation showing they have service-connected disabilities that are 100% disabling or are totally disabled based on an individual unemployability rating. As mentioned above, if you have not yet been automatically matched, fill out a formal application and submit it to the U.S. Department of Education at the address provided on the application.
How Non-Veterans Qualify
You may qualify for this student loan forgiveness program if you qualify for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI). You must provide supporting documentation that indicates:
- Your next continuing disability review is five to seven years from the date of your last SSA disability determination.
- Your next continuing disability review “has been scheduled at three years.”
- You have a “medical onset date* for SSDI or SSI of at least five years before you apply for TPD discharge.”
- You qualify for SSDI or SSI “based on a compassionate allowance.”
- You draw SSA retirement benefits, and “immediately before you qualified for retirement benefits, met one of the requirements” described above.
- Applicants are typically asked to show copies of an SSA notice of award or Benefits Planning Query.
Tax Implications For Federal Student Loan Discharges
These federal student loan discharges are “free from federal income taxation,” according to the DoE press release, but some borrowers may have state tax liabilities depending on the state. Contact your state tax assessor’s office to learn what tax consequences may apply in your zip code.
Related: Ultimate GI Bill Guide
About the author
Editor-in-Chief Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.