Federal Student Loan Discharge Procedures for Borrowers Who Become Totally and Permanently Disabled: Current Issues and Policy Considerations

David P. Smole
Specialist in Education Policy

Umar Moulta-Ali
Analyst in Disability Policy

According to the Higher Education Act of 1965, as amended (HEA; P.L. 89-329), federal student loans made through the Federal Family Education Loan (FFEL) program, the William D. Ford Federal Direct Loan (DL) program, and the Federal Perkins Loan program; and the service obligation of recipients of Teacher Education Assistance for College and Higher Education (TEACH) Grant are discharged if the borrower or recipient becomes totally and permanently disabled (TPD). These requirements are implemented according to regulations administered by the U.S. Department of Education (ED).

An individual may qualify for a TPD discharge on the basis of being unable to engage in substantial gainful activity due to a medically determinable mental or physical impairment that can be expected to last for at least 60 months or result in death. Additionally, an individual may qualify on the basis of having been determined by the Department of Veterans Affairs (VA) to be “unemployable” due to a service-connected condition.

The criteria and procedures for federal student loan and TEACH Grant TPD determinations are distinct from the disability determination procedures used for other federal benefits—in particular, Veterans Disability Compensation (VDC) performed by the VA and certain disability determinations performed by the Social Security Administration (SSA) under the Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) programs. In addition, SSA disability determinations are not accepted by ED in lieu of its own TPD determinations. Concerns have been raised that requiring individuals who have received disability determinations through SSA procedures to undergo separate disability determinations for purposes of student loan discharge may be unduly burdensome.

This report provides a brief overview of the criteria and procedures used by ED to determine whether borrowers of federal student loans and recipients of TEACH grants are totally and permanently disabled, and thus eligible to have their student loan debt or service obligations discharged. It also briefly describes disability determination procedures used by the VA to determine “Individual Unemployability” for service-connected disabled veterans, the results of which may be considered in disability determinations for federal student loan TPD discharge; and by SSA to determine eligibility for SSDI and SSI benefits. The report also identifies and examines a series of options for incorporating aspects of SSA disability determination procedures into the disability determination process for federal student loan TPD discharge.

On October 28, 2011, ED announced the establishment of a negotiated rulemaking committee that will likely address the topic of amending regulations on student loan TPD discharges. Negotiated rulemaking is expected to occur in 2012.


Date of Report: December 1, 2011
Number of Pages: 17
Order Number: R42110
Price: $29.95

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