The Biden administration this week unveiled updated guidance on changes to a federal student loan forgiveness program for borrowers experiencing disabling medical conditions.
The updates to the Total and Permanent Disability discharge guidance coincide with an amended discharge application, all associated with new TPD discharge regulations that went into effect last summer. The updated rules expand the category of medical providers who can certify that a borrower meets the TPD discharge standard, paving the way for borrowers with disabilities to more easily obtain loan forgiveness.
The new guidance published by the Education Department is designed specifically for medical providers who have been asked to certify a borrower’s TPD discharge application. The guidance can help borrowers avoid rejection by ensuring that their provider knows how to complete the form correctly, and how to avoid common mistakes. Here are the details.
Student Loan Forgiveness Based On Health Conditions
The TPD Discharge program — a longstanding federal student loan forgiveness program — can completely eliminate a borrower’s federal student debt. Direct and FFEL-program loans can qualify.
To be eligible, a borrower must be unable to maintain substantial, gainful activity due to a physical or psychological condition that has persisted for five years, is expected to continue for five years, or is terminal. The program provides borrowers with three possible pathways to demonstrate that they meet this standard and therefore should qualify for loan forgiveness:
- The borrower is certified by the Veterans Administration as 100% disabled due to a service-connected condition.
- The borrower is receiving Social Security disability benefits under certain circumstances and criteria.
- A borrower’s medical provider certifies on a form accompanying the TPD discharge application that they meet the legal standard for a discharge.
Previously, only a medical doctor or doctor of osteopathy could certify a TPD discharge application. Under the new regulations that went into effect in July 2023, additional providers can complete this certification including nurse practitioners, physician assistants, and certified psychologists. All medical providers must be licensed to practice in the United States.
Biden Administration’s New Medical Provider Guidance For TPD Loan Forgiveness
The Education Department’s new TPD discharge guidance is specifically designed for medical providers certifying that a patient meets the standard for loan forgiveness under the program. The guidance clarifies key elements of the program, how to avoid mistakes on the application, and what providers should expect during the review process, given that many providers will be completing the TPD certification for the first time in their careers.
The guidance clarifies that a borrower’s inability to engage in “substantial gainful activity” means that they cannot engage in “a level of work performed for pay or profit that involves doing significant physical or mental activities or a combination of both.” It does not, however, mean that they cannot work at all. “Borrowers who work and earn income can qualify for TPD discharge provided they are not engaged in substantial gainful activity,” notes the guidance.
The department’s guidance also instructs providers on how to properly complete the medical provider’s certification page on the TPD discharge application, which requires detailed information on both the provider and the borrower’s medical conditions. “On the application form, authorized medical professionals must provide their state and professional license number, which we verify for validity,” says the guidance. Providers “must answer all questions and write answers in every text box, even if to indicate ‘not applicable,’” says the department. “Missed questions or blank text boxes could result in rejection of the application.” In addition, when answering questions about the borrower’s diagnosis and conditions, “insurance codes or abbreviations should not be used.”
Finally, the guidance advises medical providers that the department could contact them while a borrower’s application for loan forgiveness is under review, particularly if there is incomplete or missing information. “The authorized medical professional must provide their mailing address, email, telephone, and fax so that we can follow up when needed,” says the guidance.
More than $14 Billion In Student Loan Forgiveness Approved Through TPD Discharge Program
The expansion of the TPD discharge program to include additional medical providers who can certify a borrower’s eligibility is just one of several reforms the Biden administration has enacted for the program.
The new regulations also make it easier for borrowers receiving Social Security disability benefits to qualify for loan forgiveness. Previously, borrowers must have been on a medical review cycle of at least five to seven years to receive TPD relief. Under the new rules, borrowers can also qualify if their next continuing disability review has been scheduled at three years, if they have a medical onset date for SSDI or SSI of at least five years before applying for a TPD discharge, or if they qualify for benefits based on a compassionate allowance. Many borrowers on SSI and SSDI could get a TPD discharge automatically through a data-sharing initiative between the Education Department and Social Security Administration.
The new regulations also eliminated post-discharge income monitoring, a burdensome administrative requirement that mandated that borrowers return forms to the department documenting their employment income every year for three years following a TPD approval. Failure to respond to the form on time — even if a borrower’s medical condition made doing so difficult or impossible — often resulted in discharge reversals.
As a result of these changes, the Education Department estimates that 548,000 borrowers have received student loan forgiveness through the TPD program, with $14.1 billion in total discharges.
Additional Student Loan Forgiveness For Borrowers With Disabilities
While the Biden administration’s reforms to the TPD discharge program are already yielding meaningful results for hundreds of thousands of borrowers, a new loan forgiveness plan could provide additional relief.
President Biden’s so-called “Plan B” student loan forgiveness initiative, designed as a backup plan to his first debt relief plan that wound up getting blocked by the Supreme Court, is expected to go live sometime this fall. If that plan is enacted — despite anticipated legal challenges — borrowers could qualify for loan forgiveness under several categories. One such category includes borrowers who qualify for existing loan forgiveness programs (like the TPD discharge program) but have not applied.
Another category would provide relief based on hardship. A borrower’s age and medical conditions could be factors in determining whether a borrower qualifies for loan forgiveness under this prong, as could associated medical expenses or medical debts.
The Education Department published draft regulations for the new program last month. The regulations are currently open for public comment through next week.
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