The Education Department has paused application processing for a key student loan forgiveness program for borrowers who have severe medical impairments. The processing suspension, which is part of a long-planned overhaul to streamline federal student loan programs, adds yet another hurdle in an already chaotic landscape as student loan borrowers struggle to navigate their options.
The Total and Permanent Disability, or TPD, discharge program can allow borrowers to eliminate their federal student loan debt. To qualify, borrowers must be unable to engage in substantial, gainful activity due to a medical condition that is either terminal or has persisted for the last five years, or is expected to continue for another five years. The Biden administration has enacted a number of improvements to the TPD Discharge program, making it easier for borrowers to qualify and receive relief.
Here’s what borrowers should know about the TPD discharge processing pause.
How Student Loan Forgiveness For The TPD Discharge Program Works
The TPD Discharge program is intended to help borrowers who are unable to support themselves due to a medical condition by providing a pathway to eliminating their federal student debt. Borrowers can qualify for student loan forgiveness under the program by demonstrating that they have been certified as completely disabled by the U.S. Department of Veterans Affairs due to a service-connected disability; by receiving Social Security disability benefits under certain circumstances; or by having a qualified medical professional certify that the borrower meets the TPD Discharge standard.
Some borrowers can receive student loan forgiveness automatically under the TPD Discharge program through a data-sharing initiative between the Education Department and both the V.A. and the Social Security Administration to identify qualifying borrowers.
“We work with VA and the SSA to identify people who qualify for TPD discharge,” explains the Education Department in published guidance. “We’ll send you a letter if one of these agencies tells us you’re eligible. You’ll then get an automatic discharge unless you let us know you want to opt out.”
Others, particularly those applying for relief via the medical processional’s certification, must submit a formal application. Typically, applications are processed within two to three months. During that time, borrowers shouldn’t have to make payments on their student loans.
“To get relief while you apply for TPD discharge, you can get your student loan payments paused for 120 days,” says the department. “You just need to let Nelnet know you’re planning to apply for TPD discharge.”
The Biden administration has issued a number of improvements and reforms to the TPD Discharge program designed to make it easier for borrowers to qualify and retain their relief. These reforms include expanding the categories of medical providers who can certify that a borrower is disabled; making it easier for Social Security disability benefits recipients to qualify based on how long they were receiving benefits; and eliminating post-discharge income-monitoring, which historically often resulted in student loan forgiveness being reversed. As a result of these improvements, the Biden administration approved $16.2 billion in TPD discharges for almost 572,000 borrowers, according to the latest Education Department data released in December.
What The Student Loan Forgiveness Processing Pause Means For The TPD Discharge Program
But following the major milestone of student loan forgiveness approvals, processing for the TPD Discharge program has now been temporarily suspended. This is part of a long-planned overhaul of the federal student loan system whereby more features and programs will be housed at StudentAid.gov — the Education Department’s central web portal for the federal student loan system — rather than managed by individual external loan servicers.
“We’re making changes to streamline your federal student loan and grant web experience,” says department guidance. “These changes will eventually allow you to fully manage your federal student loans and grants on StudentAid.gov. The first changes started in March 2024, and the rest will happen in stages over the next few years.”
The current stage involves the TPD Discharge program. “We will be transitioning Total and Permanent Disability (TPD) discharges to ED through StudentAid.gov,” explains the department. “Previously, TPD discharges were managed by a designated servicer. To meet this goal, there will be a pause in processing TPD discharges beginning Dec. 20, 2024, as we update and streamline our systems for a better user experience.”
Importantly, borrowers “can continue to submit your TPD forms during the pause.” But the department does not expect to complete the transition until the spring of 2025, and some borrowers may not receive TPD discharge determinations until that time. “If you apply for TPD during the pause, you can receive a forbearance until your form is processed,” says the department.
Pause On TPD Student Loan Forgiveness Processing Comes During Broader System Turmoil
While the processing pause associated with the TPD Discharge program has been planned for awhile, it comes during a volatile time for the federal student loan system.
The Public Service Loan Forgiveness, or PSLF, program went through a similar transition last summer. PSLF, which provides student loan forgiveness for borrowers who commit to nonprofit or government careers, had been managed by an external servicer. The Education Department transitioned the PSLF program to StudentAid.gov, and paused student loan forgiveness processing for several months. After the transition was completed in July, there were some hiccups including delays, backlogs, and erroneous data. Now, the PSLF program is largely functioning normally through StudentAid.gov, albeit with some residual delays. But many PSLF borrowers were in the dark about their student loan forgiveness status for months.
Meanwhile, borrowers are contending with an array of problems associated with other student loan forgiveness programs. The SAVE plan, the Biden administration’s signature income-driven repayment program designed to lower payments and provide borrowers with a pathway to relief, remains blocked by a federal appeals court and likely to get struck down. Millions of borrowers remain stuck in a forbearance as a result, unable to make progress toward student loan forgiveness under IDR plans or PSLF. Earlier this month, the Biden administration withdrew plans to enact mass student loan forgiveness in anticipation of the Trump administration scuttling those initiatives in January.
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