Can My Student Loan Be Discharged if I Become Disabled?

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When someone has become disabled through injury, illness or other means, it is possible that student loans may be discharged completely.

However, this is only for federal student loans, and private student loans are not necessarily applicable. For a discharge of the loan, the lender must agree to these stipulations based on the disability and how it affects the capability of earning and retaining income of the former student. With no standards in place for private lenders, these situations are often different in each case. This means that if the lender feels that the disability is not sufficient enough to cause a lack of work or result in an end of gainful employment, they may not discharge the loan even if other lenders do.

The United States Department of Education is assisted by Nelnet for the administration of disability in permanent and temporary situations. The borrowers that are or were students of a college or university are communicated through the Nelnet administration. It is this organization that manages discharges for disability. For other students that have become teachers, this entity also oversees the discharge of loans based on the agreement of the Teacher Education Assistance for College and Higher Education Grant Program that cancels loans based on teaching experience. Through information, a detailed account of the circumstances and the injury or illness that caused the disability, the organization may discharge the loans for the individual.

Disability Discharge

When someone has been disabled to the point that employment that is enough to pay on student loans cannot be obtained, it is possible that a discharge of the amount may be possible. This relieves the individual of any obligations for federal student loans with total and permanent disability in specific instances. This may include loans through the Direct Loan Program, the Federal Family Education Loan, a Perkins Loan, the TEACH grant specified that requires teaching services and in some circumstances other loans. Some of these situations require service, documentation, detailed accounts or other demands to prove that the loans should be discharged.

There are three ways to prove that the person with the loans is disabled so that the loans may be discharged. If the individual is a veteran with supporting documentation provided through the United States Department of Veterans Affairs, this may be sufficient to prove permanent disability with the corresponding documentation showing the service-based disability. Others have proof through Social Security Disability Insurance or Supplemental Security Income payout benefits. The Social Security Administration regularly provides documentation for those with these benefits. Once this has been determined, the individual is contacted to fill out an application. Lastly, the person may provide certifications given by a licensed medical physician or a doctor in the field of osteopathy which explains the total and permanent disability. This doctor details how the disability affects the capability of his or her patient in being able to sustain gainful employment and activity.

Next Steps

After the disability has caused a complete lack of providing income for the household, the person may go through an interview and applications process to obtain other means of financial assistance. He or she may then contact the disability office for student loans to apply for discharges for owed debts. This is usually Nelnet. After this has been initiated, the organization provides needed information for the discharge, identifies the loans corresponding to the former student and contact the loan holders to suspend the collections on the loans for a period that may last up to four months. No payments are required during this suspension period. Garnishments and offsets still continue during this time, but if the discharge is approved, these end.

Representative and Lawyer Assistance

A representative may be utilized to complete a discharge application for the applicant. He or she may assist through the entire process, but the representative must first complete the applicant form to represent the person. This is necessary so the organization may work with the individual, and some situations require a power of attorney. However, the form is essential before the representative may become part of the process. This person may be a lawyer that assists or someone else.
While many of these processes do not require legal action, a hired legal professional is beneficial to ensure all forms are filled out correctly and completely. He or she may also ensure the appropriate officials and areas are communicated with for all needed procedures. If power of attorney is part of the application process, a lawyer is necessary to draft and file the form.


Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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