It's Possible to Discharge a Student Loan Because of Disability

As of 2013 (the last year statistics are available), the average college student (graduate and undergraduate) left school with $28,400 in debt. Repayment of student loans has always been difficult, but with the economy still working its way back, many recent graduates have no jobs and no way to pay back their loans. People with disabilities that prevent them from working face an even more desperate set of challenges.

Fortunately, people with disabilities can apply for disability discharges of loans from the following programs: Federal Family Education Loans (FFEL), Perkins Loans, William D. Ford Federal Direct Loans (Direct Loans), and Teacher Education Assistance for College and Higher Education (TEACH) Grants.

To qualify for a disability discharge, a borrower must show that she has a physical or mental impairment that will either result in death or has lasted or will be expected to last more than 60 months. (Different, less stringent rules apply to veterans with disabilities.) The borrower's doctor must submit paperwork to the U.S. Department of Education certifying the borrower's condition, and, if approved, the loan will be conditionally discharged.

Once a loan is conditionally discharged, the borrower must not engage in employment that results in income exceeding the federal poverty rate for a family of two for the next three years. Once the three-year period has passed, the loan will be completely discharged.

No one wants to default on his obligations, but if a borrower cannot repay a loan due to disability, he should promptly apply for a disability discharge so that the funds he would normally spend on loan repayment can be directed towards future care.

To read the Department of Education's guidelines for obtaining a disability discharge, click here.