More students than ever are graduating with student loan debt. Tuition has skyrocketed in the last few decades and it is now common for college graduates to owe tens of thousands of dollars by the time they earn their undergraduate diploma. If an individual becomes disabled before they pay back their federal student loan debt, they may face a very difficult situation.
If an individual took out student loans to finance their education, then these loans are currently not dischargable by bankruptcy unless that individual can prove that repaying the loan would cause an "undue hardship". Proving an "undue hardship" is an extremely high standard to show unless the individual has a severe disability. The U.S. Department of Education's website provides the reasons for which a student loan may be forgiven, cancelled, or discharged: Department of Education's website.
Federal student loans may be discharged if the borrower suffers a total and permanent disability. According to the U.S. Department of Education, there are three ways for an individual to prove that they are totally and permanently disabled:
1. If you are a veteran, you can submit documentation from the U.S. Department of Veterans Affairs (VA) showing that the VA has determined that you are unemployable due to a service-connected disability.
2. If you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can submit a Social Security Administration (SSA) notice of award for SSDI or SSI benefits stating that your next scheduled disability review will be within five to seven years from the date of your most recent SSA disability determination.
3. You can submit certification from a physician that you are totally and permanently disabled. Your physician must certify that you are unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that
- Can be expected to result in death,
- Has lasted for a continuous period of not less than 60 months, or
- Can be expected to last for a continuous period of not less than 60 months.
The Department of Education allows individuals to apply for a "Total and Permanent Disability (TPD) Discharge" for federal loans online at the following website: http://www.disabilitydischarge.com/home/