6 Things You Need to Know About Total Loan Discharges

If you are considered “totally and permanently disabled,” you may be eligible to receive a complete discharge of your student loans through the U.S. Department of Education, called a total and permanent disability (TPD) discharge. This can be a confusing process, especially for those who live outside the United States, so we’ve put together a list of things you should know about TPD discharges, originally compiled by Federal Student Aid (FSA).

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1. According to FSA, a TPD discharge means you don’t have to repay several types of federal student aid, including those associated with the William D. Ford Federal Direct Loan (Direct Loan) Program, the Federal Family Education Loan (FFEL) Program, and the Federal Perkins Loan (Perkins Loan) Program.
2. To apply for a TPD discharge, you must submit an application with proof that you are totally and permanently disabled. There are three ways to go about this:
   1. If you are a veteran, you can submit documentation from the U.S. Department of Veterans Affairs (VA) showing that either a) your disability is due to your service, or b) you are considered totally and permanently disabled due to an individual unemployability rating.
   2. If you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits and have been designated totally and permanently disabled, you can submit documentation of receipt of these benefits. It’s important to note that your next scheduled disability review must be within five to seven years of your most recent SSA disability determination in order to count towards eligibility.
   3. You can submit certification from a licensed medical doctor that you are totally and permanently disabled and cannot engage in “substantial gainful activity.”
3. If your application is accepted, you will undergo a three-year monitoring period to ensure that your annual employment earnings do not exceed the Poverty Guideline amount for a family of two.
   1. Disability and/or retirement pay does not count towards annual employment earnings.
4. Discharged loans are considered income for federal tax purposes.
5. TPD discharges generally do not affect Medicaid and/or Medicare.
6. Once your loans are discharged, you will not be able to apply for another loan unless you acknowledge that future loans cannot and will not be discharged. Essentially, this means that TPD discharges are one-time only. If you plan to return to school, you might want to wait on applying for a TPD discharge.

For more information about TPD discharges, check out the FSA’s TPD discharge FAQ.

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