The Departments of Education and Veterans Affairs (VA) have teamed up to notify Veterans with severe disabilities that they may be eligible to have their federal student loans discharged tax-free.
If you have a permanent and total disability from the VA or the Defense Department, or are considered unemployable by the VA due to your service-connected disability, you may qualify for a total and permanent disability (TPD) discharge or waiver of your federal student loans or TEACH Grant service obligation.
This discharge, or waiver, of federal student loans for totally disabled persons was part of the 2012 Higher Education Act. In 2015, an executive order by President Obama directed the Department of Education to identify and notify all disabled persons eligible for TPD discharge of student loan debt.
Finally, in April 2018, the Department of Education began matching their list of student loan borrowers with the VA’s list of permanent and totally disabled or unemployable Veterans and identified over 42,000 Veterans with severe disabilities who hold a total of more than $1 billion in outstanding student loans who may be eligible for TPD discharge.
Over 11,000 of those Veterans were in default on their loan.
DEPARTMENT OF EDUCATION ACTIONS
The Department of Education is sending all those Veterans who have been identified letters explaining eligibility for the write-off of the loan and the process Veterans should follow.
The Department of Education also set up a website with a private company to provide more information and allow people to apply for writeoff of eligible student loan debt. This website is disabilitydischarge.com.
Even though the website ends in .com it is an official government website. Those applying for loan writeoff should only use this website to apply for the loan discharge process. This is a free service and you do not have to pay any fees for the application. Ignore any services claiming they can help with your discharge for a fee, as they are likely scams.
IF THE VETERAN IS UNABLE TO COMPLETE AN APPLICATION
If the Veteran can't complete the application due to their disability, their representative can complete and submit the TPD discharge application on their behalf, and assist them throughout the process. However, both the Veteran and their representative must complete an Applicant Representative Designation form before the Department of Education can begin processing any claim. You must submit this form even if you have a power of attorney for your representative
WHAT TO DO IF YOU GET A LETTER
The easiest and quickest way to start the process is to apply online . The application will ask you some simple questions, like contact information and social security number. The good news is that if you received the letter, you do not have to submit documentation of your service-connected disability since the Department of Education already has obtained this information from the VA.
You can also start the application process by reaching out to the Department of Education via email or by calling 888-303-7818 during regular business hours. They will provide you the information you need to submit an application.
Once the Department of Education receives the application, they will instruct the loan company to suspend collection activity on the student loans for 120 days while the application is being reviewed to determine if you qualify for a discharge.
As part of the discharge, your loan servicer must refund all loan payments made after the effective date of the VA’s determination of your service-connected disability.
IF YOU ARE ELIGIBLE BUT DIDN’T RECEIVE A LETTER
The Department of Education will work with the VA to conduct a new match of Veterans with severe disabilities with the student loan database to identify more borrowers that may be eligible. Borrower notifications will be sent on a staggered basis each quarter.
If you or someone you know may be eligible for a disability discharge and haven’t received a notification letter, you can find more information or start a TPD discharge application at www.disabililtydischarge.com .
If you apply for, and receive a writeoff of your student loans, you will not be eligible for any future student loans.