Disability Loan Forgiveness

The official name for the Disability Forgiveness program is the Total and Permanent Disability (TPD) discharge program. The Total and Permanent Disability (TPD) discharge program was created to offer debt relief to former students who have since loan debt.  This program only works for federal loans such as Federal Family Education Loan (FFEL) Program loans, William D. Ford Federal Direct Loan (Direct Loan) Program loan, a Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligation and/or Federal Perkins Loan (Perkins Loan) Program loans.  Private loans may not be forgiven through the Total and Permanent Disability (TPD) discharge program.

Some important information for the Disability Forgiveness Program is as follows:

  • Borrowers can receive up to 100% forgiveness of all principle and interest owed.
  • There is no requirement to make a certain number of payments towards your loans first
  • Borrower may receive reimbursement for payments made after the “disability date” as defined by the department of education
  • Borrower does not have to consolidate their student loans first before they can be forgiven

After the Higher Education Opportunity Act of 2008, it has become easier to receive this forgiveness after July 1, 2010.

Disability Loan Forgiveness F.A.Q

What is better about the PAYE program versus other forgiveness programs?

The Obama Loan Forgiveness program generally gives you a lower monthly payment because it only considers 10% of your discretionary income instead of 15% like some of the other programs. The forgiveness term is also after 240 months instead of 300 months like other retroactive forgiveness programs.

Is a 0$ payment the same as a deferment or forbearance?

No, a 0$ monthly payment is actually considered a qualifying monthly payment towards the forgiveness term and it reflects positively as an on time payment towards your federal student loans.

Can the PAYE program combine with any other programs?

Yes, The Obama Loan Forgiveness program (PAYE) can be combined with The Public Service Loan Forgiveness program (PSLF), which gives you an income sensitive payment and cuts the forgiveness term in half from 240 months to 120 months.

What will happen to my loans if I lose my job and can no longer afford my payments?

The PAYE program will always give you a payment you can afford because it is recalculated each year based off of your income and expenses. If you happen to lose your job or see a reduction in income, your monthly payment will drop accordingly.

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