If you are a veteran who has been disabled in the line of duty, you may be eligible for student loan forgiveness. There are several programs available to help veterans get their student loans excused. We will also discuss how to apply for VA disability student loan forgiveness and what you can expect from the process.
Depending on your disability rating, you may be eligible for student loan debt forgiveness.
When you are on a fixed income because of an in-service event or injury, making your student loan payments can be almost impossible.
Knowing what relief you qualify for is important, especially if you have student loans, a federal family education loan, or a TEACH grant service obligation.
The Disabled Veteran Student Loan Program
Currently, veterans with a 100 percent Total Disability Individual Unemployability rating (TDIU) or a Total and Permanent Disability (TPD) rating of 100% can discharge their federal student loans.
Previously, applying for the student loan discharge program was arduous. Veterans had to submit an application on Nelnet with many documents and criteria that needed clarification.
Many applicants were rejected for technicalities, and only 16,000 veterans could make it through the program to receive a complete discharge of their federal student loans.
Former President Trump signed an executive order requiring the VA to develop an expedited process to discharge a veteran’s debt with minimal burden.
Updates to the new program have made it easy to apply for loan discharge.
The process is now entirely online, and you will not need to submit documentation other than your total disability determination from the VA. You can complete the application in about 20 minutes.
If you are approved for loan discharge, your loans will be forgiven, and you will be refunded all the payments made from the date of your permanent disability determination by the VA to the present.
The executive order also requires the Education Department to identify veterans who qualify for forgiveness and give them a 60-day window to opt out of forgiveness before continuing to cancel the loan fully.
How to check your disability rating
To qualify for Federal student loan forgiveness, you must show proof of a 100% TDIU rating or request a TPD application. If you have already received a 100% TDIU rating or need clarification on your VA rating, you can check online!
- Log in to your VA eBenefits account
- Click the “disabilities” link on the left-hand side to check your rating
- Navigate to the top of the page and press manage, and click documents and records
- Click benefit summary, scroll down, and your current rating will be near the bottom.
How do you receive TDIU?
Your rating will be based on the extent of your service-connected disabilities and how they interfere with your ability to work. You must also provide evidence that no gainful employment is available for you.
To be considered disabled, you will need a service-connected disability with at least a 60% rating or higher OR two service-connected disabilities with a combined rating of 70%. One of the conditions must be rated at least 40%.
This process can be lengthy, taking anywhere from months to years on a case-by-case basis. Go here to check out our TDIU guide.
Qualifying for a loan discharge under a TPD
The Federal Student Loan forgiveness program allows veterans to submit a TPD application with their student loan forgiveness application. You will answer specific questions and be required to enter specific information.
You will also be required to attach supporting documentation, and a medical professional must complete section four of the form. You can fill out this form online, by printing the form out, or over the phone.
In all, the three ways to show you are Totally and Permanently Disabled is by providing one of the following pieces of documentation:
- Your VA disability rating
- Social Security Administration documentation
- Physician’s certificate
If you need help completing the Federal student loan forgiveness application, a veterans affairs representative can help!
Important things to know about the loan discharge process
There are a few important things to know about the federal student loan debt discharge program. For example, there is a three-year post-discharge monitoring period.
You will be required to repay your discharged loan if any of the following events occur:
- Your annual earnings from employment exceed poverty guidelines.
- You take out a new federal student loan under a direct loan program or TEACH grant.
- You receive another disbursement from the direct loan program or TEACH grant, and you have yet to return the disbursement in 120 days.
- You receive a notice from SSA stating you are no longer disabled.
It is important to note that during the post-discharge monitoring period, Nelnet will require you to submit your annual earnings documentation. Failing to do so will result in the reinstatement of your student loans or your obligation to complete the TEACH Grant service obligation.
Another important thing to know is that loan discharges can receive different tax treatments:
- Received before Jan 1, 2018, the discharge may be considered income for federal tax purposes
- Received from Jan 1, 2018, to Dec 31, 2025, the discharge won’t be considered income for federal tax purposes
You should contact a tax professional if you are worried about the tax implications of forgiving your student loans. There are important things to know about the loan discharge process, so read all the information carefully before applying.
You can also get help from a VA representative if you need assistance completing your application.
FAQ
Do disabled veterans qualify for student loan forgiveness?
Yes! Veterans with a 100% TDIU rating from the VA qualify for Federal student loan forgiveness.
Does 100% VA disability pay off student loans?
Any veteran, including a veteran with a 100% TDIU disability rating, will have to repay their loans unless they apply for Federal student loan forgiveness.
Which veterans are eligible for student loan forgiveness?
Veterans with a 100% TDIU rating are eligible for student loan forgiveness and teacher education assistance (TEACH) loan forgiveness.
