People with disabilities have an increased likelihood of experiencing financial insecurity. Student loan obligations may contribute to this financial distress. However, federal student loans have a range of protections under federal law. These protections are designed to prevent borrowers from struggling with unaffordable monthly payments.
Borrowers with total and permanent disabilities have the right to have their entire federal student loan balance forgiven through a process called Total and Permanent Disability Discharge (TPD). Borrowers eligible for TPD may not be aware of their eligibility. Last year, the Department of Education identified approximately 387,000 borrowers with severe disabilities that were eligible for TPD discharge.
The Department of Education identified these borrowers through a data match with the Social Security Administration (SSA); 179,000 of the identified borrowers were in default. Borrowers in default on federal student loans are at risk of having their Social Security benefits offset. Borrowers with total and permanent disabilities who are struggling with federal student loan debt can avoid default by seeking a TPD discharge.
Due to the tax implications of loan forgiveness, the discharge process cannot be applied automatically.
Consumer Financial Protection Bureau (CFPB) prepared a blog with tips for student loan borrowers with disabilities: www.consumerfinance.gov/ about-us/blog/understand-your-options tips-student-loan-borrowers-disabilities/
Leave a Reply