Is there a way to discharge my federal student loan if I have a documented disability?
Yes. You may qualify for a total and permanent disability discharge of your federal student loans which relieves you from having to repay a William D. Ford Federal Direct Loan (Direct Loan) Program loan, Federal Family Education Loan (FFEL) Program loan, and/or Federal Perkins Loan (Perkins Loan) Program loan or complete a TEACH Grant service obligation on the basis of your total and permanent disability. Before your federal student loans or TEACH Grant service obligation can be discharged, you must provide information to the Department to show that you are totally and permanently disabled. The Department will evaluate the information and determine if you qualify for a TPD discharge.
The final rule provides additional pathways for borrowers to receive a discharge based upon a disability determination made by the Social Security Administration (SSA).
Borrowers who do not qualify for a discharge due to an SSA determination will be able to submit additional forms of documentation to the Department to more easily obtain approval through the Total and Permanent Disability certification process by allowing additional types of medical professionals to sign the necessary paperwork.
Important Tax Information
Loan amounts discharged due to Total Permanent Disability are not considered taxable income by the Internal Revenue Service (IRS) for federal tax purposes. However, certain states may consider the discharged amount to be income for state tax purposes. Check with your state tax office or a tax professional before filing your state tax return.