Discharge of Student Loans Due to Total Disability

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/

For disabled veterans, the Department of Education considers information from the Veterans Administration (VA). If the VA finds that a service-connected disability makes a veteran “unemployable”, that person’s student loans will be discharged due to a total and permanent disability. For a veteran to be found unemployable due to impairments, they must prove one of two things: They are a veteran and 1) they have at least one service connected disability rated at least at 60% or 2) they have two or more service connected disabilities with at least one disability ratable at 40% or more with a combined rating of 70% or more. The veteran must also show they are unable to maintain substantially gainful employment as a result of service-connected disabilities (marginal employment, such as odd jobs, is not considered substantial gainful employment for VA purposes).

Second, the Department of Education also considers whether the Social Security Administration (SSA) approved disability benefits. The key difference in the Social Security Administration’s standard of disability compared to the Department of Education’s standard is the length of disability. The Social Security Administration requires that a claimant prove that their disability will last at least 12 continuous months or end in death. The Department of Education requires that a disability last at least 60 continuous months or end in death. For more information about the eligibility standards for Social Security disability, please see the following article: Eligibility for SSDI and SSI.

Finally, the Department of Education also advises that an individual can prove a total and permanent disability if a physician certifies that they are totally and permanently disabled for at least 60 months. The certifying physician must be a Medical Doctor (MD) or Doctor of Osteopathy (DO). If the individual has not been approved for VA unemployability benefits or SSA disability benefits, then the Department of Education will independently perform a medical review to determine if the applicant is totally and permanently disabled (although Nelnet administers this process). This is a very high standard of disability to meet. Not only must the applicant show they are disabled from a previous job, they must prove their disability is so severe as to prevent them from performing “any substantial gainful activity” for at least 60 months. The Department of Education defines “substantial gainful activity” as “a level of work performed for pay or profit that involves doing significant physical and/or mental activities.

If your claim for disability benefits has been denied, contact O’Ryan Law Firm today. We represent individuals whose short term disability, long term disability, or Social Security disability benefits have been denied.