Under a new initiative, the U.S. Department of Education will use the National Student Loan Data System and U.S. Department of Veterans Affairs (VA) databases to identify disabled veterans who have federal student loans and invite them to apply for a student loan discharge.
What’s a student loan discharge? If you qualify for a discharge of your federal student loans, you don't have to repay the debt. (To learn about different forgiveness programs for federal student loans, see Student Loan Relief: Canceling Your Loans.)
Eligibility criteria for a disability discharges. You can discharge federal student loans if you're totally and permanently disabled and you meet certain eligibility requirements. If you’re a disabled veteran, you have to submit documentation showing:
To get specific details about applying for and getting a total and permanent disability (TPD) discharge, visit DisabilityDischarge.com.
How will the Department of Education contact me? As part of the initiative, the Department of Education is sending veterans a customized letter, which explains the TPD forgiveness program and includes an application to get a discharge.
Are there tax consequences? In the past, if you received a TPD discharge of your federal student loans, you were typically responsible for paying federal income taxes on the forgiven amounts. However, under the new federal tax law, the discharged amount is excluded from taxable income. Certain states, though, might consider forgiven student loan debt as taxable income, even if the federal government does not. (To learn more about the new federal tax law, see How the Republican Tax Plan Affects Students, Education, and College Loans.)
Effective date: April 18, 2018