Does being on disability get me out of paying student loans?

Question

I have severe back problems and was recently granted Social Security disability benefits. I heard that I can also automatically get rid of my student loan debt. Is that true?

Answer

Not so fast. While most federal student loans are eligible to be discharged on account of disability, private loans might not be. (Learn about the difference between federal student loans and private student loans.)

Discharging Federal Student Loans

For those who are expected to be unable to work for at least five years (60 months), the federal student loan program has what's called a "total and permanent disability" (TPD) discharge. Generally, those who are granted a discharge get their loans canceled permanently.

A TDP discharge is eligible for loans from the Federal Direct Loan Program, Perkins Loans, and the Federal Family Education Loan (FFEL) Program. Additionally, service obligations for the Teacher Education Assistance for College and Higher Education (TEACH) grant program can be canceled. TPD discharges are also granted for veterans who have a service-related disability that's 100% disabling or you're totally disabled based on an individual unemployability rating.

Note that the fact that the Social Security Administration has already recognized that you're unable to work doesn't guarantee that the Department of Education will forgive your loan; the TPD discharge requirements are harder to meet then Social Security's. To apply for a TPD discharge, go to disabilitydischarge.com.

For more information, see Nolo's article on canceling student loans due to disability.

Discharging Private Student Loans

Private student loan lenders don't cancel loans very often. Though, sometimes when a borrower becomes permanently disabled, the lender might agree to discharge the debt. To find out about cancellation options, contact the servicer to determine if it has a disability cancellation policy. (Learn more about repayment options for private student loans.)

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