The Biden administration recently unveiled new guidance for a federal student loan forgiveness program aimed at helping borrowers with disabling medical conditions. The Total and Permanent Disability discharge program has been updated with new regulations, including expanded categories of medical providers who can certify a borrower’s eligibility for loan forgiveness. The new guidance is designed to help medical providers correctly complete the discharge application to avoid rejection and common mistakes.
Under the TPD discharge program, borrowers who are unable to engage in substantial gainful activity due to a physical or psychological condition can have their federal student debt completely eliminated. There are three pathways to qualify for loan forgiveness, including certification by the Veterans Administration, receiving Social Security disability benefits, or having a medical provider certify their eligibility. The eligibility criteria require the condition to have persisted for five years, be expected to continue for five years, or be terminal.
The new regulations, which came into effect in July 2023, allow additional providers such as nurse practitioners, physician assistants, and certified psychologists to certify TPD discharge applications. The Education Department’s new guidance for medical providers clarifies key aspects of the program, explains how to avoid application mistakes, and outlines the review process. The guidance also emphasizes that borrowers who work and earn income can still qualify for TPD discharge as long as they are not engaged in substantial gainful activity.
The expanded TPD discharge program, along with the elimination of post-discharge income monitoring requirements, has resulted in over $14.1 billion in student loan forgiveness for 548,000 borrowers. The Biden administration’s reforms aim to provide additional relief for borrowers with disabilities, as well as those facing financial hardship. The upcoming Plan B student loan forgiveness initiative is expected to provide relief under various categories, including existing loan forgiveness programs like the TPD discharge program and based on hardship factors such as age, medical conditions, and associated medical expenses.
The new regulations for the TPD discharge program make it easier for borrowers receiving Social Security disability benefits to qualify for loan forgiveness, reducing the previous requirement for a lengthy medical review cycle. By allowing borrowers to qualify based on a compassionate allowance or if their next continuing disability review has been scheduled at three years, the program aims to streamline the process for those in need of relief. The Education Department’s draft regulations for the new loan forgiveness plan are currently open for public comment, providing an opportunity for stakeholders to provide feedback on the proposed changes.
