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Why Being Permanently Disabled By The Social Security Administration May Be Great News For Federal Student Loan Borrowers

Social Security Disability and Student Loans

Finally, some good news for student loan borrowers struggling with a permanent disability.  If the Social Security Administration has determined that you’re totally disabled, you’ll soon be able seek a discharge of student loans more easily.

As reported by my colleague in Atlanta, Jonathan Ginsburg,  in his article Social Security Disability Payees Now Eligible for Discharge of Student Loans, the U.S. Department of Education has announced its new procedures to take effect on July 1, 2013 for borrowers who have been found to be totally and permanently disabled by the Social Security Administration.

Under the new policy, a disabled borrower will be able to include a copy of his Notice of Award from Social Security as proof of disability rather than being subjected to the Department of Education’s own, independent decision about a borrower’s medical or mental health disability.

This stands in marked contrast to the current procedure for those who are seeking a discharge of student loans due to disability, which forces a disabled borrower to get a second finding of disability from the Department of Education even after being found to be permanently disabled by the Social Security Administration.  This process is time-consuming, difficult and often results in a finding by the Department of Education that differs from that of the Social Security Administration.

The new rules aren’t perfect for people looking for a discharge of student loans due to disability, but they are a step in the right direction.  Forgiveness of student loan debt under the new rules will apply only if the Social Security Administration finds that the borrower/claimant is subject to a continuing disability review every five to seven years.  SSD claimants approved under a three year continuing review status will not considered totally and permanently disabled.

The new rules come into effect on July 1, 2013.  For those of you who are behind on your federal student loan payments, there are other short-term steps you can take to reduce or even eliminate your payments due until the new rules for a discharge of student loans come into effect.  If we’re working together, we’ll map out a plan of attack that helps you now while planning for the future.

Image credit: 401kcalculator.org

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By |November 21st, 2012|

About the Author:

I've been a consumer protection lawyer since 1995, working to help people end their bill problems. I'm a faculty member at the Student Loan Law Workshop, a nationally recognized speaker, and a long-time member of both the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.