Is there a way to discharge my federal student loan if I have a documented disability?
Yes. The Department of Education (ED) announced a new regulation that will allow over 323,000 borrowers who have a total and permanent disability (TPD) to receive automatic student loan discharges. The change will apply to borrowers who are identified through an existing data match with the Social Security Administration (SSA).
Previously, borrowers were required to fill out an application before receiving relief, but this new regulation allows the ED to provide automatic TPD discharges for borrowers who are identified through administrative data matching.
Borrowers who wish to opt out of their discharge for any reason will have an opportunity to do so. All discharges will be free from federal income taxation but there may be some state income tax consequences. Borrowers are encouraged to consult their state’s tax office to understand whether this discharge will be considered income under their state’s tax code.