Federal Student Loan Debt
Often individuals with disabilities will have their benefits garnished for student loan debt. However, you may be eligible to have your student loan debt forgiven.
The rules for discharging federal student loan debt pose a different standard than Social Security’s definition of disability. However, federal law states that the Department of Education will accept a claimant’s Notice of Award (NOA) for disability benefits if the notice states that the claimant’s Continuing Disability Review (CDR) will be conducted once every five to seven years. CDR is the process in which SSA reviews a disability claim to determine if a claimant continues to meet the definition of disability.
What do you need to do in order to discharge your federal student loan debt? First you will need your NOA, which must include information about when your CDR will be conducted. If you do not have a copy of your NOA, you can request it from SSA. If your NOA does not indicate how often your CDR will be conducted, then you will have to request a letter or a printout from SSA verifying your CDR scheduling. Then, you will need to go to Disabilitydischarge.com and fill out an application.
However, before you attempt to discharge your student loan debt, you will need to consider any possible tax consequences of doing so. You may not want to discharge your student loan debt, because under current law, any amount of discharged student loans will be counted as income for the year in which the discharge was granted. Although your SSDI benefits can’t be garnished for discharged student loans, SSDI benefits can be garnished for taxes on the amount of a loan that was discharged. Therefore, before you begin this process the attorneys at Social Security Law Center strongly recommend you seek out advice from a tax professional. SSI benefits cannot be garnished student loan debt.