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Student Loan Discharge for the Disabled


Updated July 09, 2014

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Are you permanently disabled? Do you have outstanding student loans? If so, you may be eligible to have your student loans forgiven by applying for a student loan discharge. This may help you avoid having to declare bankruptcy in order to have your student loans dismissed, which is an option for those who are totally disabled.

Making the decision to request forgiveness of a loan may be difficult for some. You know that you used the money, but now find that you can't pay it back. It isn't your fault that you have become disabled. If you're living on Social Security, you most certainly cannot afford to make a student loan payment, since that is a subsistence allowance. Even if you have been awarded Worker's Compensation, it may be years before you actually receive money from one of those claims.

Request Student Loan Discharge Forms

What can you do to alleviate the stress of those collection phone calls and decrease your debt? Start the ball rolling with the Federal Student Aid office, a.k.a. the U. S. Department of Education. To begin, you'll need to contact the agency that handles your student loan, such as Sallie Mae or Great Lakes. You'll have to request a loan discharge form for Total and Permanent Disability. Most of these loan originators have online forms that you can download on your personal computer, or you can request them over the phone. These forms have to be signed by you and your physician.

In the case that you are a caregiver for someone who is totally disabled, and you have Power of Attorney, you may also sign the appropriate forms for the disabled person in your care.

Initial Loan Discharge Application

A physician has to sign your application for loan forgiveness. Be sure that the physician states exactly what the disabling condition is. Just stating that an individual is disabled, without any detailed explanation, will only get a claim denied in rather short order, and then you'll have to start the process all over again. Have the primary care physician or specialist keep a copy of this form in your file, as the Federal Student Aid office may contact them for further information if needed. Applicants have 90 days from the date a physician signs the form to submit it to the U.S. Department of Education, FSA.

Once the U.S. Department of Education receives the form, it will be sent to a department that handles the Total and Permanent Disability requests. They review the requests and will ask for additional information from your physician (if needed), and in some cases, from the Social Security Administration.

Once this office of Total and Permanent Disability receives your application, you'll receive a letter letting you know that your request is being processed. You will get a letter notifying you whether or not your application has been approved within 2-3 months. Your loan will be in a deferment status during this time.

Loan Discharge Application Tips

Unfortunately, this procedure is one fraught with delays and frustrations. For this reason, anyone attempting to get their loans forgiven should do the following:

  1. Make sure to keep copies of all requests that a physician has signed. If your physician faxes a copy to the loan servicing center or U.S. Department of Education, you should also send a copy through regular mail to them. Faxes have a habit of mysteriously disappearing or never reaching their destination.
  2. Follow all time limits given from the loan servicing centers or U.S. Department of Education to avoid delays and outright denials.
  3. If at first you don't succeed, try, try again! If you are turned down the first time you apply, re-apply. It may take you more than one try to get your application approved.
  4. If you're stuck waiting to re-apply, don't forget there are other deferment options including economic hardship.
  5. When all else seems to be failing, try the following: submit an application for Total and Permanent Disability. Then, request your physician to write a personal letter to the Total and Permanent Disability office explaining why you are disabled.

Final Thought

Remember that all applications are considered on a case-by-case basis. That is why it is important to include as much information in your application (and subsequent applications) as possible so that "the people on the other end" understand your case. While it may be a long and drawn out process for some, the end result can help alleviate a lot of stress when it comes to handling finances for the disabled.

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