Total And Permanent Disability Discharge- The Next Big Thing to Look out for

The total and permanent disability discharge is when a borrower is totally disabled and is not in a state to pay the loan. Their are many provisions provided to them. Find out the details like what is exactly a total and permanent disability discharge, how to apply, procedure after approval and more

Updated by Chandni Agarwal on 23rd July 2020

The obligations towards your Federal student loans and TEACH Grants that are discharged If the borrower or student turns total and permanently disabled. 

Unlike Social Security disability which is short term or temporary disability status, the total and permanent disability is very different and the next big thing. Part of borrowers who are getting the Social Security benefits are not eligible for a total and permanent disability discharge. Anyhow, some forms of Social Security disability are likely permanent in nature and it can be treated as a total and permanent disability.

When the borrower is not able to enlist in substantial gainful activity because of any physical or mental health deterioration which can supposedly lead to death or can be excepted to last for at least 60 months (5 years) the Total and permanent disability happens.

Make sure you exhaust all your federal student loan options before considering private lenders, as the federal student loans provide benefits that may help you in repaying your loans.

If you are a loanee of federal student loans and are totally and permanently disabled then this article may help you figure out if you are eligible for a student loan discharge on your federal student loans. Read more on student loan discharge and cancellation.

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Eligibility for Total and Permanent Disability (TPD) Discharge

You can be eligible for a total and permanent disability (TPD) discharge of your federal student loans or TEACH Grants service obligation if you are totally and permanently disabled. You will not be required to repay your loans or complete your TEACH Grant service obligation, once you receive a TPD discharge.


Three ways to demonstrate TPD

  • Documentation can be provided to Veterans from the U.S. Department of Veterans Affairs (VA) that demonstrate that the borrower has a service-related disability and is unemployable. 

  •  Under certain circumstances, borrowers may be treated as having a total and permanent disability, who are acquiring Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI). Documentation must be submitted by these borrowers which will show the next scheduled disability review by the Social Security Administration (SSA) can occur for 5 or more years after their most recent disability is determined. The documentation can occur on the SSA notice board. You can request SSA a Benefits Planning Query by calling them at 1-800-772-1213 (or TDD/TTY 1-800-325-0778).

  • Certifications from a licensed U.S. physician (M.D. or D.O only) can be provided by borrowers, which will show that they are not engaged in any advantageous activity because of a medically-determinable physical or mental deterioration that can be expected to result in death or which has lasted or can be expected to last for at least 60 months (5 years). Once the discharge application is signed by the physician, the certificate should be submitted within the 90 days of the date.


How to apply

www.disabilitydischarge.com. The website operated by Nelnet operates under contract with the U.S. Department of Education, in this website the borrower or their nominated representative can apply for a total and permanent disability discharge. The intention of applying for a total and permanent disability discharge by the borrower or the nominated representative can be notified to Nelnet by calling 1-888-303-7818 or by sending them to email to DisabilityInformation@Nelnet.net 

Once the borrower or the nominated representative contacts Nelnet, for 120 days the collection activity on borrower’s loan will be suspended, and in meanwhile the discharge application and supporting documentation are collected submitted and reviewed.


After approval

After a borrower’s application for a TPD is accepted, and any loan payment is made after the borrower’s disability date then it will be returned to the person who made the payments. The date at which the physician’s certification of the discharge application is signed is called the disability date, the date the SSDI/SSI documentation was received by the contractor or the date the VA determination of a service-related disability.


IRS Form 1099-C

IRS Form 1099-C is a form that a borrower receives when there is a cancellation of debt. It is also very important in total and permanent disability discharge.

If the discharged amount is $600 or more an IRS Form 1099-C (Cancellation of Debt) will be received by the borrowers. The canceled debt is considered as an income for the borrower by IRS Form 1099-C consider and income tax must be paid on this income. (exceptions are there for the treatment of canceled debt as income for bankruptcy discharge and insolvency). 


Reinstatement of debt

 A three-year post-discharge monitoring period will be there once the debts are discharged. The loan will be reinstated if any convinced events like those explained below happen during the monitoring period. Loans discharged based on a veteran’s service-related disability for them, monitoring period won’t be applicable. 

Events that can lead to the reinstatement of debts that were discharged due to a total and permanent disability include: 

  • During the monitoring period, if the annual income of the borrower from the employment exceeds 100 percent of the poverty line for a family of two in the borrower’s state. Disregarding the actual family size of the borrower it is restricted based on a family of two only. With the starting date of the total and permanent disability discharge, the annual earnings are measured and no earning previous to that date is included. Investment income, retirement income, and disability benefit payments are not treated to be earnings from employment.

  • The borrower receives a new federal student loan or TEACH Grant, only federal education loans that are not discharged are included in federal consolidation loans which are ignored by these restrictions. 

  • Within the 120 days of the disbursement date, the borrower failed to return a disbursement on a federal student loan or TEACH Grant that was received prior to the date of discharge. 

  • The Social Security Administration (SSA) will send notice to the borrower abolishing their status as totally and permanently disabled or changing the disability review period from 5 or more years to less than 5 years. 

  • Even after the U.S. Department of Education requests the borrower to submit the information and the borrower fails to notify the U.S. Department of Education of changes in the borrower’s address or telephone number or failing to provide documentation of annual earnings from employment.

The borrower cannot receive new federal student loans or TEACH Grants unless a physician gives them a certificate that they can engage in meaningful activity. The borrower should also sign a statement agreeing that they will not any future total and permanent disability discharge based on any ongoing disability unless the disability deteriorates naturally.


Contact Details

You can be eligible for a Total and Permanent Disability Discharge for your Federal Family Education Loans (FFEL), Direct Loans, TEACH Grant service obligation, Perkin Loans if you are not able to work because of a total and permanent disability. 

To know how to apply for total and permanent disability or if you want to check the status of your application or for any other information you can sign up and create an account on DisabilityDischarge.com or call 888-303-7818 for assistance.

In order to find out some more details total and permanent disability discharge, you can visit the StudentAid.ED.gov.

It is advised to have in-depth knowledge on how to use the student loan gov, to make the best use of it.

The cost of education keeps increasing day by day. Student loans provide considerable aid in shouldering these responsibilities.

You might be able to find good terms and rates that suit your needs by checking out these Best Student Loans