Can student loans be forgiven due to disability?
Surely, student loans can be forgiven, if you have disability. You can graduate college debt-free. In fact, Biden recently signed to cancel $5.8 billion in federal student loan for disabled people. This includes college students and graduates. As long as your disability affects your ability to earn a sustainable income, you can qualify for it.
In other words, it is for people with total and permanent disability. This is the reason it is called a Total and Permanent Disability Discharge- TPD. According to a press release by the U.S Department of Education, the total fund for student loan discharge is now $8.7 billion with the TPD plan. And, this is for more than 450,000 borrowers.
With this said, here are some more facts you need to know about this student debt cancellation.
When Do Student Loans Get Forgiven For Disability?
It is happening right now. The new regulation allows for automatic cancellation of $5.8 billion in student loans. However, this amount is for disabled people. The best part of the new fund injection into TPD is the new rules.
The U.S Department of Education removes restrictions which can stop you from getting it immediately. Now, you can get automatic discharge without filing an application. This is as long as your name is already registered with administrative agencies as a disabled person. Namely, Social Security Administration or U.S Department Of Veteran Affairs.
It is incredible, is it not?
No more filing of applications for disabled people who meet the criteria for student debt cancellation. Once your name is on one of these two agencies, you can expect your debt discharge within a few weeks. The Department Of Education promises to have your student debt discharged by the end of the year.
How Many Disabled People Are Eligible For Loan Forgiveness?
The U.S Department Of Education press release puts the number above 323,000 borrowers. But, this number does not include other people who may qualify for other specific discharge requirements. After all, there is about $8.7 billion meant for the new TPD action.
For example,
A few months ago, there were about 46,000 borrowers who got their student debt forgiveness reinstated. This is after a denial under TPD, since they refused to give their earning information. The amount discharged is $1.3 billion dollars. Were you amongst these?
If no, do not worry. There is still enough fund to go around. Especially, the new $5.8 billion Biden-Harris Administration has signed. Having said these, here is what makes you qualified for the student loan forgiveness for the disabled.
What Disabilities Qualify For Student Loan Forgiveness?
Any which has official documentation will cancel your student loan debt. The Federal Student Aid Office highlights these three sources as legit:
- A Physician’s certification- A certification from a physician saying your disability can prevent from working is allowed. Furthermore, the document should say the disability can cause physical or mental impairment which will lead to mortality in case of substantial work. Also, the disability can cause additional injury to your person which may last at least 60 days. Or, it has already caused injury that lasted within the time frame.
- The U.S Department Of Veteran Affairs Record- If you have a disability record with the VA, you will qualify for student debt discharge. This is as long as you have a record from VA, saying your disability is service-related. Not only service-rated, but also a 100% disability. Otherwise, other official document which proves a total disability will make you qualify.
- Social Security Administration Record (SSA)- If you are on social security, the U.S Department Of Education will discharge your student loan. However, your last SSA determination has to be recent. At least, there has to about a five year gap before your next rating.
As can be seen from the above, these are how to know you are qualified for an automatic student loan forgiveness with disability. Like I mentioned earlier, the $5.8 billion are for more than 323,000 disabled borrowers. I presume there are more than the number in our country. Therefore, I will advice you to start applying now.
How To Apply For Student Loan Forgiveness Due To Disability
Right now, Nelnet helps the Student Aid Office with the TPD student debt discharge applications. Click here for more info about Nelnet or TPD on the Federal Student Aid website. You can email or call them. They are available Monday through Saturday.
I am glad the U.S Department Of Education makes it easy for anyone to reach them, even on weekends. It is mighty kind of them. Is it not, my dear reader?
Anyways, here are a couple of things you need to know before requesting an application from them. Firstly, your call with Nelnet for TPD application will automatically suspend any payments going to your federal student debt. This suspension goes on for 120 days, so you can have enough time to handle the required necessities as highlighted earlier.
Finally, it is worthwhile to note the discharge on federal student loan for the total and permanently disabled covers TEACH Grants. With that said, click here to apply for the TDP discharge on the official Disability Discharge website. If you have any questions, contact the Student Aid Office. Or even better, email Nelnet on [email protected] since it assists the office.
Do I Have To Pay Taxes On Student Loan Forgiveness Due To Disability?
Usually, the student loan debt cancellation is taxable as federal income. However, this particular TDP discharge is an exception. At least, this is until December 1st of 2025. For now, total and permanent disability discharge from Jan 18th 2018 to Dec 1st 2025, is not taxed.
But, any discharge prior to Jan 18th 2018 is still taxed. It does not escape the federal income tax. I thought I would mention it to you. Again, you can direct questions about this to Nelnet or Federal Student Aid Office.
Is Biden Going To Forgive Student Loans For Other Student Population And Graduates?
Sincerely, I do not think it is going to happen this year. There is no all student loan cancellation of debt bill yet. Biden forgiving student loans on a wide scale for any amount seems not to be a priority in 2021. Why do I say this to you?
Currently, there is a memorandum to Democrats. It is part of the FY2022 Budget Resolution Agreement Framework. The goal is to create funds for Biden Administration programs, especially the major ones. If you read through the memorandum addressed to the democrats, there is no mention of school loan forgiveness.
Rather, these are the reconciliation instructions for the Committee On Education with respect to you:
- Funds for historical colleges. On the memorandum, references are made to HBCUs, MSIs, HSIs, TCUs, and ANNHIs.
- Tuition-free community colleges
- Maximizing Pell Grant Award
In the final analysis of the memorandum, $726 billion is reserved for these three and a few other reconciliation instruction for Committee On Education. It is worthwhile to note the tuition-fee community colleges do not mean student debt cancellation. For now, there is no specific statement on the annual budget referring to it.
Despite these omissions on the FY2022 Budget, I am glad the Biden Administration is able to cancel student debts for total and permanent disabled people. I believe these potential 323,000 student debt discharges will have a positive effect on the economy. As for non-qualifying borrowers, the fight for all student loan forgiveness is not over yet. Biden-Harris Administration has three more years to fulfill their campaign promise to you.
How To Write A Check To Someone: 3 Best Practices