Canceling Your Student Loans: Permanent Disability

If you’re permanently and totally disabled—and are able to prove it—you can discharge your federal student loans.

Under certain circumstances, you can cancel (discharge) your federal student loans. This article discusses how to cancel student loans due to permanent disability.

Cancellation Due to Permanent Disability

You can cancel federal student loans if you're disabled and you meet certain eligibility requirements. In most cases, to qualify for this cancellation, you can't have had the injury or illness at the time you signed up for the loan. If you did have the disability at the time you got the loan, you might be able to cancel your loans if you can show substantial deterioration of your condition.

Documenting Your Disability

To qualify for cancellation, you must demonstrate to the U.S. Department of Education (the Department) in one of the three following ways that you’re totally and permanently disabled:

By providing a certification from your treating physician. Your doctor has to certify that you’re unable to engage in any substantial gainful activity because of a medically-determinable physical or mental problem that:

  • can be expected to result in death
  • has lasted for a continual period of time that’s not less than 60 months, or
  • can be expected to last for a continual period of time that’s not less than 60 months.

By showing you receive Social Security Disability (SSDI) or Supplemental Security Income (SSI). You can provide documentation of your Social Security Administration (SSA) notice of award for SSDI, SSI benefits or a Benefits Planning Query (BPQY form 2459) that says your next scheduled disability review will be within five to seven years from the date of your most recent SSA disability determination. (In some cases, the Department collects documentation automatically from the SSA about whether people get SSDI or SSI benefits. If you receive disability benefits and the SSA determined you are totally and permanently disabled, the Department may contact you and ask you to submit a student loan discharge application, but you won’t need to provide documentation of your SSA benefits in order to qualify.)

By proving that you’re a disabled veteran. If you’re a veteran, you may send in documentation from the U.S. Department of Veterans Affairs (VA) that shows the VA determined you have a service-related disability that's 100% disabling or you're totally disabled based on an individual unemployability rating.

Suspension of Collection Activities

If you notify the Department that you plan on applying for a disability discharge, the Department will tell your loan holders to suspend collection activity for up to 120 days. This means that you won’t have to make payments for up to 120 days, which gives you time to complete and submit the discharge application. After you submit your application, the Department will contact your loan holders and tell them to suspend collection activity on your loans for, again, a period of up to 120 days.

The suspensions don’t apply to wage garnishments or tax offsets though. But if the Department approves your request for a discharge, the wage garnishments and/or tax offsets will be discontinued.

What Happens if Your Student Loan Discharge is Approved?

What happens after you receive a discharge depend on how you show that you’re totally and permanently disabled.

VA documentation. If the Department approves your request because you submitted VA documentation, you’ll be discharged from making further payments beginning from the date of your disability.

SSA documentation or physician certification. If the Department approves your request because you submitted (or it received) SSA documentation or a physician certification, you’ll be discharged from making further payments after the date the Department originally received the documentation used to approve your request. However, you’ll be subject to a three-year post-discharge monitoring period starting on the date the discharge is approved. During this time, you’ll have to meet certain requirements, like your annual employment earnings can't exceed the Poverty Guideline amount for a family of two in your state, regardless of your actual family size. If you fail to meet the requirements, you’ll have to repay your discharged loans. (Learn more about the requirements you’ll have to meet during the three-year post-discharge monitoring period.)

How to Apply for Cancellation

You may apply directly to the Department through an online system run by Nelnet. You'll submit one application for all of your federal student loans. Go to https://www.disabilitydischarge.com to start the process.

Taxes After Cancellation

Under the 2017 Republican tax reform law, if you receive a discharge of your federal student loans due to disability, the forgiven amount is excluded from your taxable income. (Previously, the forgiven amount was taxable.) The exclusion is applicable after December 31, 2017, but won't apply to discharges after December 31, 2025. (Learn more about How the Republican Tax Plan Affects Student Loan Borrowers.)

Learn More

To find additional information about a Total and Permanent Disability Discharge, go to the U.S. Fepartment of Education’s Federal Student Aid website or https://www.disabilitydischarge.com.

To get general information about how to deal with student loans, what happens when you default on federal student loans, and how to get financial aid, see our Student Loan Debt area.

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