President's memo should expedite TDP loan discharge
With a lot of fanfare and happy stakeholders looking on, President Trump signed a Presidential Memorandum at the recent AMVETS conference in Kentucky that aims to expedite the process for 100 percent disabled veterans or those veterans who have been identified as totally disabled based on individual unemployability (TDIU) to have their student loans forgiven. According to the memorandum’s language, the loan forgiveness program was created with passage of the Higher Education Act of 1965, and amended by the Higher Education Opportunity Act in 2008 and other acts (Higher Education Act). Its goal is to honor veterans who are totally and permanently disabled as a result of their service to the Nation by providing for the discharge of their Federal student loan debt. Borrowers who have been determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected condition and who provide documentation of that determination to the Secretary of Education are entitled to the discharge of such debt. The memo aims to expedite that process by having the two federal agencies coordinate the paperwork better.
After the signing ceremony, the President said in signing the memorandum that “All the debt will be gone. That’s hundreds of thousands of dollars owed by wounded warriors – it’ll be gone forever and there will be no federal income tax.” He also called on states to waive any state tax owed.
WHAT IT DOES
The memo directs the Dept. of Education and Dept. of Veterans Affairs to work together to expedite the processing of applications for a program to discharge the student loan debt for totally and permanently disabled veterans. All people with Total and Permanent Disability (TPD) are eligible by law to have the government discharge their federal student loans, but the benefit has not been widely publicized.
However, fewer than half of the 50,000 eligible veterans have accessed the program, prompting veterans service organizations, such as Vietnam Veterans of America, Veterans Education Success and the Retired Enlisted Association, to lobby for an easier process. In fact, legislation was winding itself through Congress to accomplish what the President did with the sweep of his pen.
THE FIRST ATTEMPT
Veterans found applying for the program challenging and it required the Departments of Veterans Affairs and Education to share data to determine who was eligible. The Education Department had to send a preliminary application to eligible veterans and then veterans had to furnish enough proof of their disability in order to make them eligible
THE SECOND ATTEMPT
In 2018, the Trump Administration began working to streamline the process. According to a Washington Post story published on April 16, 2018, the
Administration announced plans that day to make it easier for permanently disabled military veterans to have their federal student debt wiped away. Working with the Department of Veterans Affairs, the U.S. Department of Education would begin identifying eligible veterans who will receive an application for loan forgiveness. Disabled veterans still had to sign and return the application to complete the process.
THE MOST RECENT ATTEMPT
Now with the memo’s directives, the Department of Education and the Department of Veterans Affairs (VA) will be partnering to make federal student loan discharge more accessible for veterans. Under this initiative, the Department of Education will use the National Student Loan Data System and VA database to identify veterans with federal student loans. It will then send those veterans a customized letter explaining a total and permanent disability (TPD) discharge and its eligibility criteria as well as an application for discharge. By reaching out to veterans in a proactive manner, the Department of Education and VA hope to raise awareness about TPD discharge and help more disabled veterans qualify for loan forgiveness.
YOU MUST BE 100 PERCENT DISABLED FOR THESE LOAN DISCHARGES
Unfortunately, individuals with lesser amounts of disability do not qualify. A TPD discharge requires the veteran’s service connection rating to be 100 percent or for him or her to be totally disabled based on an individual unemployability.
WHAT TYPE OF LOANS QUALIFY?
The following student loan types are the only ones that qualify for forgiveness with a TPD discharge:
- William D. Ford Federal Direct Loan (Direct Loan)
- Federal Family Education Loan (FFEL)
- Federal Perkins Loan (Perkins Loan)
WHAT IF YOU HAVE A TEACH GRANT?
If you have a service obligation from a TEACH Grant, this may also be discharged if you qualify for Total and Permanent Disability with the U.S. Department of Education.
PRIVATE STUDENT LOANS AREN’T ELIGIBLE
Private student loans qualify. Some private loan lenders do offer loan forgiveness if you have a disability. For example, Sallie Mae, Discover, and Wells Fargo will waive your loan balance if you’re totally and permanently disabled. To find out if your lender offers loan discharge, contact your loan servicer directly.
However, if you think you could qualify for TPD discharge, you don’t have to wait for the VA or Department of Education to reach out to you. You can complete the application and start the process on your own, which might help you get student loan forgiveness sooner.
If you need assistance with any of your veterans’ benefits, reach out to the attorneys at Whitcomb, Selinsky Law PC or its sister firm, the Rocky Mountain Disability Law Group. Please call (303) 534-1958 or complete an online contact form.
 AMVETS (American Veterans) is the nation’s most inclusive Congressionally-chartered veterans service organization, representing the interests of 20 million veterans.