Disability Discharge Of Student Loan
Student loans are one of the most common types of consumer debt. In fact, almost half of all Americans have student loan debt—and that number is only growing. But for those who can’t work due to a disability or illness, it can be impossible to pay off these loans and get ahead in life. Fortunately, there is a way out: Total and Permanent Disability (TPD) Discharge. This article will help you understand how TPD discharges work, why they’re so important for disabled borrowers, and what steps you need take before applying for your own discharge if you’re disabled.
Can I Discharge My Student Loans?
You can discharge your student loans if you:
- Are totally and permanently disabled. The Department of Education will evaluate your circumstances to determine whether you meet the definition of disability. If they do, they’ll discharge all or part of your loans under this provision in their regulations (34 CFR 685).
- Are a veteran who has served on active duty during a period in which war was declared by Congress. This includes those who entered military service after the start date for their discharge, but only if they became totally and permanently disabled as a result of injuries incurred while on active duty. To be eligible for this benefit, students must have been enrolled in a school program within six years before applying for it (34 CFR 682).
- Were victims of fraud by their schools or lenders related to federal aid programs administered by Sallie Mae (version 7 or higher; 34 CFR 685).
Different types of student loans
There are several types of student loans:
- Federal student loans, which include subsidized and unsubsidized Stafford Loans and Grad PLUS loans.
- Private student loans, which can be either direct or indirect. Direct private student loans are made by banks or credit unions while indirect private student loans are made through a commercial finance company.
- Parent PLUS Loans, which allow parents to borrow money for their child’s education (the parent takes out the loan, not the child). These are federal government backed but require a credit check on both parent and child before approval is granted. A Perkins Loan is another option for parents who wish to borrow money for their child’s education; these are also federal government backed with flexible repayment terms but have less stringent eligibility requirements than Parent PLUS Loans (no credit checks will be required for most applicants).
A final type of loan that you may hear about is an Alternative loan . This type of loan does not require any cosigner or collateral; instead it relies on a combination of income verification plus annual payments (usually calculated as 10% – 15% of monthly gross income) paid directly into an account set up by the lender until all amounts owed have been satisfied fully paid off completely paid off completely paid away forever gone forever lost forever gone forever lost never again seen again ever again ever again never again seen/heard/thought about ever again
What is Total and Permanent Disability?
Total and permanent disability (TPD) is a condition that renders you unable to work. You can prove this with a doctor’s note or documentation of the disability. Qualification for TPD depends on your age at the time of discharge, whether you are blind and/or have a physical impairment, and whether you have other sources of income besides Social Security Disability Insurance (SSDI). If all these conditions are met, then this will qualify for an immediate discharge of your student loans without having to pay anything back.
The tax implications for receiving a discharge may be good or bad depending on how much money was left over after paying off your debts at that time. There are also advantages for qualifying borrowers because they no longer have any obligation toward their student loans once approved for total and permanent disability status
How do I prove my Disability?
In order to qualify for a disability discharge, you must submit a disability claim and provide documentation that your condition meets the requirements of one of the following:
- Listing 1.09 – You are unable to do substantial gainful activity due to a medically determinable physical or mental impairment (i.e., psychiatric).
- Listing 1.06 – Your ability to work is limited because of an intellectual or developmental disability (i.e., autism spectrum disorder).
- Listing 1.05 – You have been diagnosed with cancer that has metastasized (spread), and now require treatment with immuno-suppressive agents.
Can I Get My Co-Signer Off the Loan?
Yes, you can remove your co-signer from the loan. However, it is difficult to do so without proving that you are disabled and cannot work in any capacity. You will have to provide medical documentation from a doctor who has evaluated you. This documentation must state that your disability is permanent and will prevent you from working at any job in the future.
What are the Tax Implications of a Disability Discharge?
If you are receiving a disability discharge, you may be wondering what tax implications will affect your case. While there is no way to predict how your particular situation will play out, we can help shed some light on what’s going on with taxes when it comes to student loans.
If you have been approved for a disability discharge of your student loan debt and the remaining balance of that loan is forgiven, then the IRS considers this forgiven debt as taxable income. This means that you will still need to report this amount as part of your gross income even though it has been forgiven by the lending institution. The amount forgiven should also be included in any information submitted with your tax return each year until all balances have been paid off or discharged by the lender at which time they can no longer collect from them (see related reading below).
Once again, if Social Security payments are taken into account while calculating monthly benefits under SSI/SSDI program rules then those same standards apply here too (see related reading below). However since these programs do not consider student loans as assets when making their determination about eligibility for SSI/SSDI then it does not matter whether or not there was ever any outstanding balance owed before applying for a disability discharge from them either way–it would be treated similarly just like above.”
Advantages of Disability Discharge
- You can get rid of the debt.
- You can get rid of the debt without paying it.
- You can get rid of the debt without having to pay taxes on it.
- You can get rid of the debt without having to pay the interest on it
You must prove you cannot work in any capacity to discharge your student loans.
You must be unable to work in any capacity, not just in your chosen field. You’ll need to prove that you can’t work in any capacity for the next five years before you can receive a discharge of your student loans.
If you have a severe mental or physical disability, then it’s possible that the court will rule in your favor and grant you this type of discharge from repayment on your student loans. This is very rare though and requires specific documentation from doctors or other professionals such as therapists who have treated the patient over time, proving that they are unable to perform basic tasks such as dressing themselves or walking across the room without assistance
In conclusion, if you have questions or concerns about student loan disability discharge, we recommend contacting a financial professional who can help you navigate these complex laws.