Student Loan Forgiveness for the Disabled

How to apply for a student loan discharge

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Are you permanently disabled? Do you have outstanding student loans? If so, you may be eligible to have your student loans forgiven by applying for a student loan discharge. This may help you avoid having to declare bankruptcy in order to have your student loans completely dismissed, an option for those who are totally disabled.

Making the decision to request forgiveness of a loan may be difficult for some.

You know that you used the money, but now find that you can't pay it back. It isn't your fault that you have become disabled. If you're living on Social Security, you most certainly cannot afford to make a student loan payment, as it is a subsistence allowance. Even if you have been awarded workers' compensation, it may be years before you actually receive money from one of those claims.

How to Request Student Loan Discharge Forms

What can you do to alleviate the stress of those collection phone calls and decrease your debt? Get the ball rolling with the office of Federal Student Aid, or the U.S. Department of Education. To begin, you'll need to contact the agency that handles your student loan, such as Sallie Mae or Great Lakes.

You will then request total and permanent disability (TPD) discharge. Many loan originators have online discharge forms that you can download on your personal computer.

You could request them by phone. These forms need to be signed by you and your physician. In the case that you are a caregiver for someone who is totally disabled, and you have power of attorney, you may also sign the appropriate forms for the disabled person in your care.

Initial Loan Discharge Application

A physician has to sign your application for loan forgiveness.

Be sure that the physician states exactly what the disabling condition is. Just stating that an individual is disabled, without any detailed explanation, will only get a claim denied in rather short order. You'll have to start the process all over again.

Have the primary care physician or specialist keep a copy of this form in your file, as Federal Student Aid may contact them for further information if needed. Applicants have 90 days from the date a physician signs the form to submit it to the U.S. Department of Education.

Once the U.S. Department of Education receives the form, it will be sent to a department that handles TPD requests. They review the requests and, if necessary, will ask for additional information from your physician and, in some cases, from the Social Security Administration.

After the TPD office has received your application, you'll receive a letter letting you know that your request is being processed. You will get a letter notifying you whether or not your application has been approved within 2 to 3 months.

Your loan will be in a deferment status during this time.

Loan Discharge Application Tips

Unfortunately, as is the case with student loans in general, this procedure is one fraught with delays and frustrations. For this reason, anyone attempting to get their loans forgiven should do the following:

  1. Make sure to keep copies of all requests that a physician has signed. If your physician faxes a copy to the loan servicing center or U.S. Department of Education, you should also send a copy through regular mail to them. Faxes have a habit of mysteriously disappearing or never reaching their destination.
  2. Follow all time limits given from the loan servicing centers or U.S. Department of Education to avoid delays and outright denials.
  3. If at first you don't succeed, try, try again! If you are turned down the first time you apply, reapply. It may take you more than one try to get your application approved.
  4. If you're stuck waiting to reapply, don't forget that there are other deferment options, including economic hardship.
  5. When all else seems to be failing, try the following: submit an application for total and permanent disability. Then, ask your physician to write a personal letter to the TPD office explaining why you are disabled.

The Bottom Line

Remember: all applications are considered on a case-by-case basis. That is why it's so important to include as much information in your application as possible so that "the people on the other end" understand your case. While it may be a long and drawn out process for some, the end result can help alleviate a lot of stress when it comes to handling finances for the disabled.

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