Last Updated on July 31, 2023 by Oluwajuwon Alvina
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Social Security disability benefits can be garnished for student loans , but only under certain circumstances. If you have a student loan and are receiving SSDI benefits, you may be wondering whether the government can seize your benefits to pay off your student loan. The answer is yes—but only in certain circumstances.
In order to be eligible for Social Security Disability Insurance (SSDI), you must have worked enough quarters (usually 10 or more) in your lifetime and have paid taxes into the Social Security system. If you leave the workforce because of a disability, you can receive SSDI payments from the government as long as you meet certain requirements; this includes being unable to work due to your condition and having limited income from other sources.
If you are receiving SSDI payments, the government will deduct any money owed for student loans from your monthly payment—but only if:
-you’ve borrowed money from a federal program such as Federal Perkins Loans;
-you’ve borrowed money from an employer or private lender through a Department of Education loan program; or
-you’ve borrowed money from an eligible state education program.
What disabilities qualify for student loan forgiveness
Federal student loan borrowers qualify for student loan forgiveness if they suffer from any mental or physical disability that is severe, permanent and prevents them from engaging in substantial gainful activity. Proof of the disability can come from a doctor, the SSA, or VA.
Borrowers with disabilities can have their student loan debt discharged if a permanent physical or mental impairment prevents them from working. The Department of Education accepts proof of your disability from a doctor, the Social Security Administration, or the Department of Veterans Affairs. Some private lenders may rely on the same information.
Ahead, learn what disabilities qualify for student loan forgiveness and how to apply for a total and permanent disability discharge.
Latest on student loans
- Covid-19 forbearance extended: The newest student loan payment pause moved the repayment start date to May 2, 2022.
- New deadline: The latest coronavirus pandemic forbearance moved the student loan recertification deadline to August of 2022.
- Did your servicer change? Do this if you have a new student loan servicer.
What disabilities qualify for student loan forgiveness?
Any permanent physical or mental impairment that prevents you from working can qualify for student loan forgiveness. For example, borrowers have received a total and permanent disability discharge (TPD) due to:
- stage IV or terminal cancer
- chronic fibromyalgia
- degenerative disc disease (severe back pain)
- major depression
- bipolar disorder
Attention-deficit hyperactivity disorder, on the other hand, is typically not severe enough to cause measurable functional impairments that keep you from working. It’s worth looking into, though. If your doctor believes that it causes significant impairment, you can still apply for cancellation due to ADHD.
The SSA maintains a list of adult impairments, any of which could qualify you for disability discharge.
Learn More: Income-Driven Repayment Plan Forgiveness
What loans qualify for TPD Discharge?
All federal student loans are eligible for discharge due to disability, including:
- Direct Loans.
- Federal Parent PLUS Loans — discharged only if the parent becomes disabled.
- Federal Family Education Loans (FFEL).
- Federal Perkins Loans.
- Joint Spousal Consolidation Loans — the non-disabled spouse will still be responsible for the loan.
For private student loan debt, contact your lender to learn if they’ll forgive your loans due to disability. Read more about private student loan forgiveness programs.
Learn More: Can Defaulted Student Loans be Forgiven?
How disabled borrowers prove eligibility
There are three options to prove your disability and start the discharge process:
- Physician’s certification: Your primary care physician or specialist can certify they believe you can no longer work due to your medical issues. To apply, you will need to download a PDF copy of the Total and Permanent Disability Discharge Application form and get your doctor’s certification.
- Social Security Notice of Award: You qualify if two things are true: First, you receive Social Security Disability Insurance or Supplemental Security Income benefits. Second, your notice of award letter from the Social Security Administration must say that your next scheduled disability review will be within five to seven years from the date of your most recent SSA disability determination.
- Veteran Affairs Determination Letter: If you are a veteran with a service-connected condition that has left you unemployable, you can qualify for this type of loan discharge without providing documentation from your doctor. As a veteran, you will qualify if you have a letter from the VA stating you either have a service-connected disability that is 100% disabling or if you are totally disabled based on an individual unemployability rating.
Learn More: $10,000 Student Loan Forgiveness
How to apply for disability student loan forgiveness?
Not long ago, Education Secretary Miguel Cardona announced the department would provide automatic TPD discharges using data matching to identify borrowers listed in the SSA and VA’s system as having a qualifying disability rating.
In addition to removing this application barrier, the department shared it would:
- Stop asking borrowers to provide information about their current income.
- Pursue eliminating the three-year monitoring period for income.
Borrowers seeking disability discharge based on a physician’s certification do not qualify for this automatic forgiveness. They can start the student loan forgiveness for disability process by visiting disabilitydischarge.com. That website, which is administered by the student loan servicer Nelnet, allows you to apply online or by submitting a paper form.
You have four options to submit the application:
- Submit TPD form by postal mail: US Department of Education, PO Box 87130, Lincoln, NE 68501-7130.
- Submit TPD form by fax: 303-696-5250.
- Submit TPD form by email: [email protected].
- Submit TPD form online: https://secure.disabilitydischarge.com.
Learn More: Student Loan Forgiveness During Coronavirus
Student Loan Disability Discharge Form
To discharge your loans due to a physical or mental impairment, you’ll need to complete the Total and Permanent Disability Discharge Application. The TPD Discharge form is two pages long.
You’ll complete the first page and, if you’re applying based on a disability rating from the SSA or VA, you’ll attach a benefits letter from the agency and submit the application.
If you’re getting your doctor to certify that you’re severely and permanently disabled, then you’ll complete the first page and have your treating physician complete the second page.
Once done, you’ll submit the form to Nelnet for processing using one of the options listed above.
How long does a TPD discharge take?
The application process from start to discharge often takes less than 30 days to complete.
You can check the application status by contacting Nelnet at 888-303-7818. Customer service representatives are available Monday–Friday from 7 am to 2 am EST and Saturday from 8 am to 7 pm EST. You can also email the loan servicer at [email protected].
What happens after TPD discharge
If your application is approved based on a physician’s certification, you’ll be put under a three-year post-discharge review where the Education Department will check your earnings.
For the three years after this review begins, you’ll need to file paperwork showing your income for the past tax year. If your income exceeds the Poverty Guideline amount for a family size of two for your state — no matter your actual family size — your balance can be reinstated. The easiest way to prove your income during the three-year monitoring period is to provide a copy of your tax return, W-2, or Social Security benefits award letter. You can get that letter at ssa.gov.
You can avoid this monitoring period if your discharge was granted based on SSA or VA documentation, following policy changes made under the Trump and Biden administrations.
What happens after the three-year post-discharge monitoring period?
After the period ends, your loans will officially be discharged. You’ll no longer need to report your income or update your contact information. Here are three other things that will happen:
Refund of payments. You will get a refund for payments made after Nelnet gets notice of your disability, but payments made before this notice was received won’t be refunded.
Taxable income. Not so long ago, legislators passed two laws — The Tax Cuts and Job Act and The American Rescue Plan Act — that made all student loan forgiveness — even for disability — tax free through December 31, 2025. These laws apply only to federal tax liability with the IRS, however. Consult with your state tax office or a tax professional to see if you’ll owe income taxes for the discharged loans.
Credit report updated. Not long after the discharge is granted, the lender or servicer will contact the credit bureaus and report the status change. This update shouldn’t have a negative impact on your credit score, but your score could drop if you get the loans removed from your credit history.
Learn More: Income-Driven Repayment Plan Forgiveness
Student Loan Forgiveness for Disability Questions
Can my student loans be forgiven if my spouse is disabled? You cannot get your federal student loans forgiven if your spouse is disabled. However, your spouse may be eligible to have their student loan debt forgiven through the Total and Permanent Disability Discharge Program.
Do I qualify for student loan forgiveness if my spouse is a 100% disabled veteran? There are no student loan forgiveness programs for spouses of 100% disabled veterans. While your disabled spouse can get rid of their loans, there aren’t any options to eliminate any of your debt — even if you’re the primary caretaker.
Is there student loan forgiveness for partially disabled veterans? Veterans with less than a 100% disability rating (e.g., 90%, 50%, etc.) can discharge their student loan debt if a doctor certifies that their mental or physical impairment — for example, posttraumatic stress disorder (PTSD) — prevents them from engaging in substantial gainful employment.
Can my student loans be forgiven if my child is disabled? If your child is permanently disabled, the Department of Education will not forgive the Parent PLUS Loans you borrowed on their behalf. However, it will forgive the loans you borrowed for yourself if you become severely disabled.
Similarly, some private lenders will forgive your child’s loan balance if they are disabled. But if you were a cosigner on those loans, the lender will demand repayment from you. Since most student loan debt never goes away, negotiating a student loan settlement may be your only way to get relief.
Can you get student loans while on disability? Typically, you’re blocked from borrowing new federal student loans after receiving a disability discharge, but there’s one exception. You can borrow more loans if a physician certifies that you can engage in substantial gainful activity — and you sign a statement acknowledging that the new loan or TEACH Grant service obligation can’t be discharged in the future based on the same disability (unless your health deteriorates).
can social security disability be garnished for student loans
Since 2007 Linda Carrasquillo has been unable to work due to an injury she suffered at her job cleaning buses.
And yet, every month for seven years, the government took great pains to collect on a $4,000 loan she took out to pay for her daughter’s schooling — by withholding part of the money she received through her Social Security disability benefits.
Depending on the year, the amount the government took each month to repay the old student loan ranged from $35 to $103. That was money she could have used. During the period the government collected on her debt, Carrasquillo’s health suffered. She began dialysis and underwent surgery for a kidney transplant, which required her to travel frequently to Philadelphia, where her doctor was based, from her home in Queens.
“It might sound like a little money, but for a person in my situation it’s a lot…$100 is a lot, $50 is a lot,” Carrasquillo, 62, said. She was left with $750 per month, the minimum in benefits the government is required to leave borrowers. “It was a very big strain on my life.”
Feeling stressed by the loan, Carrasquillo and her daughter called the nonprofit organization collecting the debt on behalf of the federal government to see if she could work out a deal. But they couldn’t come to an arrangement Carrasquillo could afford. Eventually she fell behind on her rent and faced the possibility of eviction.
But what Carrasquillo didn’t know is that the entire time she was struggling to manage her limited finances, the government should have never been collecting on her debt. She qualified for what’s known as a total and permanent disability discharge, which allows borrowers to have their federal student loans wiped away if they have a physical or mental disability that makes it impossible for them to work.
Recently, Carrasquillo finally got the more than $4,000 the government garnished from her Social Security checks back — but it took a lawsuit. She’s one of nine plaintiffs in a case brought by Brooklyn Legal Services, a division of Legal Services NYC, in 2016 against multiple federal agencies that settled last month. In total, the plaintiffs got back nearly $23,000 that was garnished from their disability benefits to repay their student loans.
Carrasquillo said if she hadn’t met Johnson Tyler, the attorney who represented the borrowers, she would never have known she was entitled to have her debt discharged. “There was a lot of things that weren’t revealed to me,” Carrasquillo said. “They weren’t truthful. We’re trying to help our children and they just take advantage of us.”
Borrowers are often unaware of their right to fight the government
The case highlights the challenges borrowers face accessing the benefits and protections guaranteed to them in a federal student-loan system that has extraordinary power at its disposal to collect. When a borrower defaults on their federal student loan, the government can garnish their Social Security benefits, wages and tax refunds to get its money back.
Borrowers have the right to mitigate or avoid these consequences by taking certain steps — including, if they’re disabled, filing for a disability discharge. But borrower advocates have complained for years that a lack of information from the government and the companies and nonprofit organizations it hires to manage the student-loan program have meant struggling borrowers face challenges accessing the lifelines to which they’re entitled.
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In 2015, the government garnished the Social Security benefits of nearly 114,000 borrowers over 50. Of those, more than half were receiving Social Security disability benefits, not Social Security retirement benefits, according to a 2016 report from the Government Accountability Office.
The Department of Education “should be trying to make it as easy as possible and as streamlined as possible for borrowers who are eligible for disability discharge to receive a disability discharge,” said Persis Yu, the director of the Student Loan Borrower Assistance Project at the National Consumer Law Center.
The agency has taken some steps in that direction. In 2016, the Department cross-referenced its records with the Social Security Administration to identify nearly 400,000 borrowers who qualified for a disability discharge and sent them a letter and completed disability discharge application for the borrower to sign and return if they wanted their debt cancelled.
Some want these borrowers to have their debt automatically discharged
But advocates would like the government to go further by automatically cancelling the debt in cases where they know a borrower qualifies for a disability discharge. A bipartisan group of 51 attorneys general wrote to Secretary of Education Betsy DeVos last month asking that she automatically cancel the debt of veterans who the agency has identified as qualifying for a disability discharge.
Liz Hill, a Department of Education spokeswoman, wrote in an email that the agency couldn’t comment specifically on the case but that it’s “committed” to making the total and permanent disability discharge process as easy as possible for veterans. “We are reviewing our current processes and procedures to determine what, if any, changes we can implement,” she wrote.
Many of the plaintiffs’ stories illustrate another reason borrowers who qualify for a disability discharge may have trouble accessing it — the debt collectors that work with borrowers on behalf of the Department to recoup defaulted student debt aren’t incentivized to tell them about it.
The collectors are paid $1,710 to get borrowers current on their loans through a process called rehabilitation, but are only paid $150 to help a borrower with a disability discharge.
(Not all organizations that work with defaulted student-loan borrowers have this incentive structure. Some of the plaintiffs who struggled to get information about a disability discharge, including Carrasquillo, worked with nonprofit organizations known as guarantee agencies).
“No one is telling anyone about a disability discharge,” Tyler said. “All of these people did various things on their own, did all this research to figure out what their rights were. It’s a system that was not working at all.”
The government garnished one veteran’s Social Security benefits for years even though he qualified for a discharge
Marshall Lee experienced the challenges posed by the system first-hand. Shortly after serving in the U.S. Army as a paratrooper in the late 1970s, the now 63-year-old took out about $2,000 in student loans to attend a New York City community college, ultimately dropped out without completing a degree and defaulted on his debt, according to court documents.
Lee has received disability benefits since 2000. He suffered from mental illness that made it impossible for him to work. His plane jumping days also resulted in a challenges with his hip, which ultimately needed to be replaced, and arthritis. Since at least 2014, he’s received a designation from the Social Security Administration that means his disability is severe enough that he automatically qualifies for a discharge of his student debt, according to court documents.
Nonetheless, beginning in 2015, Lee saw his Social Security checks dwindle to repay his debt. The organization collecting his debt, attempted to steer Lee towards a rehabilitation program — a way for borrowers to cure their default, but where they’re still obligated to pay the loan — even though Lee told them he was disabled and wanted to stop his disability benefits from being taken, according to court documents.
In the meantime, the loss of funds put a strain on his finances. Lee, who also coped with head injuries due to his time on the U.S. Army boxing team, fell behind on his utility bills. Ultimately, after years of getting his benefits garnished, Lee was able to have his debt discharged and thanks to the lawsuit, he’s getting back the roughly $700 he lost.
“That was a relief, that took a lot of stress off me,” he said. “I couldn’t have managed.”
Borrowers with disabilities now have better information on how to avoid garnishment
Tyler is hopeful that the suit will help the system work at least a little bit better, beyond just the plaintiffs listed in the suit. During the course of the litigation, the government agreed to change the notice it sends to borrowers before it garnishes their benefits to clearly state that borrowers with disabilities could prevent their benefits from being garnished if they applied for a total and permanent disability discharge.
The new notice also provides the website and phone number borrowers can use to do this. The previous notice didn’t make any mention of the disability discharge process.
There’s also a greater likelihood the borrowers will actually receive the notice. During the course of the lawsuit, the government also agreed to send the notice to the last address any agency has on file for the borrower, including the address where they may be receiving their Social Security benefits. In the past, the government would send the notice to the address a borrower’s latest tax filing, but because many of the borrowers who are subject to this offset are low-income and have no obligation to file taxes, that address was often useless.
About one-quarter of the plaintiffs in the suit never got warning their benefits were being garnished, because it was sent to an address they weren’t using, Tyler said.
“A lot of people don’t even realize that they’ve been nickled and dimed this way,” he said. “Hopefully this notice will make a difference.”
In conclusion, it is possible for Social Security disability payments to be garnished for student loans, but it’s not common. The main reasons this happens are that the borrower has defaulted on their student loan payments or they have been ordered to repay the loan in full by a court order.
If you’re worried about your disability payments being garnished for unpaid student loans, it’s important to talk with an attorney about your options. You may be able to get help from an agency like the National Consumer Law Center or the National Consumer League.