Borrowers with a Federal Family Education Loan (FFEL), a Direct Loan, a Perkins Loan, or a TEACH Grant may seek a total and permanent disability discharge of their loans or TEACH Grant service obligation if they are—
- Certified by a physician as being 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;
- A veteran who has been determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected disability.
“Substantial gainful activity” is a level of work performed for pay or profit that involves doing significant physical or mental activities, or both.
This page provides an overview of the discharge processes. For a description of loan holders' roles and responsibilities, click here.
To receive a total and permanent disability discharge, a borrower must submit a completed Discharge Application: Total and Permanent Disability to the loan holder within 90 days of the date the physician signs the application. No payments are due on the loan while the borrower’s eligibility for discharge is being reviewed. If the loan holder finds that the discharge application does not support the conclusion that the borrower is totally and permanently disabled, the borrower will be notified of that decision. The borrower must then resume payment of his or her loan(s). If the loan holder finds that the application supports the conclusion that the borrower is totally and permanent disabled, the loan holder assigns the loan to the U.S. Department of Education (the Department). The Department may also arrange for an additional review of the borrower’s condition by an independent physician at the Department’s expense. If the Department finds that the discharge application supports the conclusion that the borrower is totally and permanently disabled, the Department discharges the borrower’s obligation to repay a loan or complete a TEACH Grant service obligation.
Once the Department grants a discharge, the borrower is then subject to a 3-year post-discharge monitoring period beginning on the date the Department grants discharge. During this monitoring period, the borrower (1) must not have annual employment earnings that exceed the Poverty Guidelines for a family of two in the borrower’s state; (2) must not receive a new Perkins, or Direct Loan or a new TEACH Grant; and (3) must ensure the return of a loan disbursement to the loan holder or TEACH Grant disbursement to the Department within 120 days of the disbursement date, in the case of a loan or TEACH Grant that was made before the discharge date, but was disbursed during the 3-year post-discharge monitoring period.
During the 3-year post-discharge monitoring period, the borrower must promptly notify the Department if the borrower receives annual earnings from employment that exceed the poverty line amount for a family of two in his or her state, regardless of actual family size; or if there is a change in the borrower’s address or telephone number. If requested, the borrower must also provide the Department with documentation of his or her annual earnings from employment.
If at any time during or at the end of this monitoring period the borrower does not meet the conditions outlined above, 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.
If a borrower’s obligation to repay a discharged loan is reinstated, the Department will notify the borrower of the reinstatement, and will not require the borrower to pay interest on the loan for the period from the date of discharge until the reinstatement date. The notification to the borrower will include (1) the reason(s) for the reinstatement; (2) an explanation that the first payment due date on the reinstated loan will be no earlier than 60 days after the date of the notification of reinstatement; and (3) information on how the borrower may contact the Department if the borrower has questions about the reinstatement or believes that the obligation to repay the loan was reinstated based on incorrect information. Comparable information will be provided to TEACH Grant recipients if a discharged TEACH Grant service obligation is reinstated.
Loan Holders have been previously advised that borrowers must submit their Application for Total and Permanent Disability (Application) with the original signature of the borrower, not a photocopy or other facsimile. The Department has determined that borrowers may provide the loan holder with a photocopy or facsimile signature and no longer need to provide an original signature on the Application, and loan holders may process the application with the photocopy or facsimile signature. In addition, the certification of a photocopy discharge application is no longer required.
Veterans Disability Discharge
A veteran will be considered totally and permanently disabled for purposes of this discharge if the veteran provides documentation from the U.S. Department of Veterans Affairs showing that the veteran has been determined to be unemployable due to a service-connected disability.
There are two types of disability ratings granted by the Department of Veterans Affairs (VA) that qualify a veteran for a discharge of his or her Title IV student loans and/or TEACH Grant service obligation based on the statutory standard:
- A determination that the veteran has a service-connected disability, or service-connected disabilities, that are 100% disabling; or
- A determination that the veteran is totally disabled based on an Individual Unemployability determination.
If the veteran supplies acceptable documentation of one of the above ratings, the borrower does not need to have a physician complete Section 4: of the Discharge Application: Total and Permanent Disability.
If the loan holder finds that the veteran qualifies for discharge under the standard for veterans, the loan holder refers the borrower’s application and supporting documentation to the Department for further review.
For complete, detailed information on the procedures for discharging Title IV loans and/or TEACH Grant service obligations for qualifying veterans, please review the Dear Colleague Letter (GEN-09-07) on this subject.