Can a Student Loan be Discharged Because of Disability?

The average college student (graduate and undergraduate) leaves school with a tremendous amount of student loan debt. Repayment of student loans has always been difficult, but with the economy the way it is, many graduates are struggling to pay back their loans. Some people who are unable to work because of their disabilities are beyond the ability to struggle.

Fortunately, people with disabilities can apply for disability discharges of student loans from the following programs: Federal Family Education Loans (FFEL), Perkins Loans, William D. Ford Federal Direct Loans (Direct Loans), and Teacher Education Assistance for College and Higher Education (TEACH) Grants.

To qualify for a disability discharge, a borrower must show that they have a physical or mental impairment that will either result in death or has lasted or will be expected to last more than 5 years. (Different, less stringent rules apply to Veterans with disabilities.) The borrower’s doctor must submit paperwork to the U.S. Department of Education certifying the borrower’s condition, and, if approved, the loan will be conditionally discharged.

Once a loan is conditionally discharged, the borrower must not engage in employment that results in income exceeding the federal poverty rate for a family of two for the next three years. Once the three-year period has passed, the loan will be completely discharged.

While no one likes to default on a debt, if a borrower cannot repay a student loan due to disability, they should promptly apply for a disability discharge so that the funds they would use toward loan repayment can be used towards their medical care.