On August 21, President Donald Trump announced his intention to forgive the federal student loans of every disabled military veteran.
While that’s exciting news, there is already a system in place for student loan discharge for disability.
So what’s going to change?
The details of that plan haven’t been announced. The President is leaving that up to the Department of Education to develop a system.
What’s clear is that the current system isn’t working as it should.
Right now, less than 43% of disabled military veterans have actually had their federal student loans forgiven. That means about 25,000 qualifying veterans aren’t taking advantage of the program. And a lot are defaulting on their loans.
The President hopes to make the process much more simple for veterans.
Again, exactly how that will happen is up in the air.
As it currently works, applying for a student loan discharge for disability as a military veteran is no different than applying as a regular citizen.
Anyone with federal student loans who are disabled to the point where they can’t hold a full-time job can apply for a Total and Permanent Disability, or TPD, discharge.
All you need is documentation from the Department of Veteran Affairs, Social Security, or a physician to report that your disabilities make it so you can’t hold down a job.
I won’t speculate too much, but I think the Department of Education will continue to use the same TPD application, only making it easier for veterans. Keep your eyes on the news for more updates.
Should I utilize the TPD discharge?
Right now and into the future, once you’re notified that you qualify for student loan forgiveness as a disabled veteran, you have 60 days to decide whether to take it.
So should you?
In most cases, the answer is yes.
In fact, there’s really only one reason why you wouldn’t take the disability discharge, and that’s if you plan to take out student loans in the future.
For example, let’s say you have a permanent disability and can’t work, but you still want to seek more education.
If you take the TPD discharge, it will make it harder for you to take out student loans in the future.
In order to get another student loan, you have to submit a letter to your school from a physician that says you’re able to work again. You also have to sign a statement acknowledging your awareness that a TPD discharge in the future won’t be available. It’s a one time offer.
A TPD discharge comes with a three-year post-TPD period to fully pay out. If you decide to take out a student loan again during those three years, you’d have to make payments on your previous student loan. But again, that’s only if you didn’t wait for the three years.
I’ll mention too that taxes used to be a concern with a disability discharge. You had to pay income tax on the discharge amount.
Now, any discharge after Jan.1, 2018 won’t be taxed.
If you think you qualify for a Total and Permanent Disability discharge for your student loans, or if you’ve been notified by the military that you’re eligible and need help with the application, I’m your guy.
Not only am I a student loan discharge lawyer, but I also served in the Army.
I’ve seen both sides.
Let’s see if you qualify.