Student Loan Death and Disability Hardship

bankruptcy and student loansThe US Department of Education has a Student Loan Disability Hardship due to permanent and total disability. The Us department of Education defines Total and permanent disability as the inability to work and earn money because of an injury or illness that is expected to continue indefinitely or to result in death. To qualify you must submit a physician’s certification of total and permanent disability. The physician must certify that you are 100 percent disabled according to the definition of disability above.

Application Conditions

As of July 1, 2002, if you are determined to be totally and permanently disabled, your student loan will be placed in a conditional disability discharge (CDD) status as of the date the borrower’s physician certified his or her TPD application for three years. During this period, you don’t have to pay principal or interest. If you continue to meet the total-and-permanent disability requirements during, and at the end of, the three-year conditional period, your loan will be canceled. If you don’t continue to meet the cancellation requirements, you must resume payment. At the end of this three-year conditional discharge period, the borrower will receive a discharge of his or her loan(s) unless during that period the borrower has received a new FFEL, Direct, or Perkins loan, or a new TEACH Grant, or the borrower had annual earnings from employment above the Poverty Guidelines for a family of two in the borrower’s state.

If at any time during this conditional disability discharge period the borrower does not meet either of these two requirements, then the borrower’s loan(s) or TEACH Grant service obligation(s) will be reinstated and the borrower will be required to make payments or fulfill his or her TEACH Grant service obligation. Veterans may now qualify for total and permanent disability discharge under a separate process that does not require the conditional discharge period.

To begin the application process, the borrower must complete Section 1 of the Discharge Application: Total and Permanent Disability and sign and date the application in Section 3. The borrower will then need to have his or her physician complete Section 4 of the application. The borrower should make sure that the physician completes this section of the application thoroughly.

Further information on borrower responsibilities when applying for a TPD discharge can be found at the borrower responsibilities for discharge section of this site. Frequently Asked Questions for Borrowers and a description of the TPD process are also available.