Over Half a Million Borrowers Granted Student Loan Forgiveness Due to Health Complications
The Biden administration has reported that over half a million federal student loan borrowers have been granted forgiveness under the Total and Permanent Disability discharge program (TPD). This program aims to provide debt cancellation to borrowers with disabling medical conditions that inhibit their ability to participate in substantial, profitable employment.
Borrowers seeking forgiveness via the TPD must meet set eligibility guidelines. The sufferer must be “unable to work in any substantial gainful activity due to a medically determinable physical or mental impairment. There are three ways to demonstrate this: via the Department of Veterans Affairs, the Social Security Administration, or a duly licensed medical practitioner.
The Biden administration has simplified the route to federal student loan forgiveness through the TPD program and has eased the reinstatement process. Efforts included waiving the income monitoring during the three-year post-discharge period and reversing over 40,000 post-discharge reinstatements during the COVID-19 pandemic. Moreover, the administration forged a data-sharing initiative between the Social Security Administration and the Education Department to identify eligible borrowers, eliminate the need for a formal application, and offer automatic relief.
Nevertheless, issues remain. Loan forgiveness has been a taxable event in the past, although recent legislation exempts TPD discharges from federal taxation—until the conclusion of 2025. Borrowers should confer with a tax advisor before pursuing TPD relief.
The Biden administration is also working on another plan under the Higher Education Act. One potential eligibility criterion for the new scheme could be the experience of some form of hardship, including disabling medical conditions, and receipt of public aid. However, details about the hardship-based loan forgiveness program are yet to be released. The department plans to hold a public hearing on it later this month.
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For help with student loans, including the TPD discharge process, Nelnet is the department’s TPD discharge servicer. For assistance with other federal student loans or benefits, contact the appropriate department. If assistance with TPD discharges or other student loans supplementation is required, borrowers may consult eddcaller.com for useful steps to contact EDD.