Taking out student loans is a common practice for many students. But what if you are suddenly disabled and can’t work and pay your loan? There are special rules that can help you get rid of this debt. This article will tell you how to cancel your student loan if serious health problems prevent you from earning.
What is Health Debt Forgiveness?
Medical debt cancellation is an option for those who cannot work due to a serious illness to eliminate their student loan obligations. If your health prevents you from earning and paying off your loan, you can apply, and if your condition is approved, your debt may be canceled entirely.
Medical debt cancellation is specifically for borrowers who are unable to work due to a physical or mental impairment that is likely to result in death, has been in continuous use for at least 60 months, or is likely to continue for such a period. This is called total and permanent disability (TPD).
Not all loans are eligible for medical cancellation. This relief typically applies to federal student loans. Private lenders may offer similar terms, but their terms and criteria may differ.
To begin the cancellation process, you must prove your condition with documentation certified by a physician. This documentation must show that you meet the criteria for total and permanent disability.
Step-by-Step Application Process
Cancellation of a student loan due to disability requires attention to each step. Here’s a step-by-step guide:
Collection of Medical Evidence
First and foremost, amass all medical evidence that shows one’s disability. This documentation should include:
- Diagnosis: A description of your illness or condition.
- Treatment: A description of the treatment one receives and procedures or medications prescribed to them.
- Prognosis: You must state whether your condition is temporary or permanent. This is necessary because only those deemed totally and permanently disabled will have the loan canceled.
All documents must be signed by a licensed physician authorized to practice medicine in your state.
Filling out the TPD Discharge Application
The next step is to complete a special application. You can download the application from the Federal Student Aid Service website or your lender servicing your loan. Important:
- Complete all application sections. Provide accurate information about yourself, your loan, and your health.
- Provide the correct details: Personal details such as name, address, and loan number must be accurate, as errors can delay the process.
- Attach medical certificates: Attach all medical evidence you have collected along with your application.
Submitting an Application
Once you have collected all the documents and filled out the application, you need to send them for review. There are several ways to do this:
- Electronically: You can apply online. This is a quick and convenient way. Usually, such online services are provided by your lender.
- By mail: If it is more convenient, you can mail the application and documents. The mailing address is provided in the application instructions.
- Through a representative: If you have an official representative (for example, a lawyer or other person authorized to act on your behalf), he or she can submit the documents for you.
Waiting for a Decision
As soon as you apply, it will be considered. The lender will review your medical records to verify whether or not you have total and permanent disability. Sometimes, further information may become necessary, like explaining certain medical records. If such information is requested, a response must be immediately provided for speed.
Receiving a Final Decision
If your application is approved, you will receive formal notice that your student loan debt has been discharged. You will then no longer be required to make payments. If your application is rejected, you will be given a reason for this. It will also explain how you can appeal.
What to Expect After Submitting Your Application?
Here’s how the process will go after you apply for student loan forgiveness for disability:
- Document review: A loan officer will review your personal and medical information. If the disability requirements are met, your loan will then be forgiven. This process can take anywhere from 3 to 6 months. It’s also important to be available and have all original documents with you, as loan officers may request additional information at any time. Try to respond to any requests promptly to minimize delays in processing your application.
- Receiving a decision: Once the review is complete, you will receive a notification of the results by mail. If your application is approved, you will receive official confirmation that your debt has been forgiven. You will not have to make any payments after that.
- Monitoring period: If your student loan is forgiven, loan officers may monitor you for up to 36 months. You will also be required to notify the agent periodically of any changes in income.
- Appeal process: If your application is rejected, you can appeal. The denial letter will detail the reasons for the denial and a step-by-step appeal process, including deadlines and documents required for review.
Impact on Loan Repayment
Having your student loans canceled due to disability has a significant impact on your financial situation. Here’s what happens:
- Once your loan cancellation request is approved, you can stop making loan payments immediately and use the money for other purposes.
- If you continue making payments after your disability is approved, you can get that money back.
- Your report will show that the loan was canceled. This will not lower or improve your credit score. Your credit report will simply show that the student loan is inactive.
- You won’t have to worry about tax implications, as canceled loans are tax-deductible from 2018 to 2025.
The Role of Doctors in the Process
Whether your student loan will be forgiven due to disability depends on the doctor. After all, the doctor’s diagnosis and the accuracy of the paperwork determine whether your debt will be forgiven.
- The doctor must provide a certificate confirming that the patient meets the criteria for total and permanent disability. That is, the doctor must certify that the disability is likely to result in death and has or will last 60 months or more.
- The doctor must fully and accurately document the medical diagnosis, symptoms, treatment, and prognosis. Records are paramount because they form the basis for the loan forgiveness application.
- The U.S. Department of Education provides special forms that doctors must complete. These forms ensure that all necessary information is collected consistently and in a format that loan officers can easily process.
- Loan officers may occasionally need additional information or clarification. Doctors must be prepared to respond promptly to these requests to avoid unnecessary delays in the application process.
Final Thoughts
If you have a disability and student loans, you can apply for student loan forgiveness. If you qualify, your debt will be forgiven, and you can use the freed-up funds to do things important to you, like improving your health, supporting your family, or saving for the future.
However, to be successful, you need to be well-prepared. Follow the instructions and be proactive in the process. And always remember to check out the support and resources that can help.