New Jersey lawyer focusing on special education law and employment law


Disability and Federal Student Loan Forgiveness

Students who borrow federal money to go to college, but are unable to immediately pay back the loan, have several options. The student-borrower may apply for deferment, forbearance, or even reductions in monthly payments.

Both a deferment and forbearance allow you to temporary suspend your monthly loan payments.

Laura Mann, an attorney with offices in northern New Jersey who has experience in bankruptcy matters, explains the differences between deferment and forbearance:

To get a deferment, you must apply to the federal government, and you must qualify based on your life circumstances, such as economic hardship, active duty service in the military, and so forth. The benefit of deferment is that, under certain circumstances, the federal government may pay the interest that was being charged during the deferment period on a federally subsidized student loan.

Forbearance is similar to a deferment in the sense that you do not have to make payments towards your student loans or those payments may be lowered for a period of time. Forbearance may be an option if you do not qualify for a deferment. To get a forbearance of your loan, you must apply to your loan servicer, not the federal government. If you meet the eligibility criteria for a mandatory forbearance, the servicer must grant your request. They also have the discretion to grant you a forbearance if you are suffering from financial hardship or illness.

For more information, the following site may be helpful:

Some borrowers may qualify for a loan forgiveness program.

For example, a student who took out a federal student loan for college tuition may have the loan forgiven if the student spends 10 years of full-time employment in the public sector and makes 120 payments (10 years) without defaulting. See the College Cost Reduction and Access Act of 2007.

A 2-page fact sheet and an excellent Q&A about the Public Service Loan Forgiveness program is available here and there.

But can a borrower who becomes disabled get a complete discharge of his or her federal student loan?

Many people may not be aware of this, but under current federal law, borrowers who take out federal student loans and subsequently develop a total and permanent disability (“TPD”) may have their federal student loan debts forgiven.

Someone who has TPD is one who is “unable to work and earn money because of an injury or illness that is expected to continue indefinitely or result in death.”

But for many years, applicants with disabilities have had difficulties getting their student loans discharged due to red tape and confusing rules.

In February 13, 2011, a well respected academic journal published a well researched investigative article about how difficult it was for people with disabilities to get their federal loans discharged.

The article revealed that the Department of Education engaged in questionable practices. The Department of Education did not have a practice of providing notice when a decision was made or providing a reason for denying the borrower’s application to discharge the debt. In fact, there was no appeals process for borrowers seeking to discharge their debts. In some cases, the Department of Education garnished the borrower’s monthly disability checks from Social Security to pay off the student loans.

Critics argued that the Department of Education’s practices were unethical.

In May 2011, U.S. Senator Tom Harkin and U.S. House Representative George Miller wrote to the Department of Education and asked several questions regarding the transparency of the forgiveness process, whether the determination of the Social Security Administration would be taken into consideration, and what actions will be taken to ensure that the borrowers’ due process rights are preserved.

In November 2012, the Department of Education published new rules directing officials to accept disability determinations made by the Social Security Administration and to recognize that TPD determinations by the Social Security Administration is sufficient to discharge student loans debts. Borrowers will need to submit their SSA award letters as proof of their disability. Additionally, all applicants seeking to have their debts discharged will have their due process rights preserved.

In the new rules, the Department of Education acknowledged that prior to November 2012, the loan debt discharge process was “inconsistent . . . and created undue hardship.”

The Department of Education’s new rules takes effect on July 1, 2013.

New Jersey attorney Laura Mann says that “In the meantime, applicants with disabilities who have questions about whether they should continue to make payments should consult with an attorney to discuss their options.”

Laura Mann, Esq., has a general practice with a concentration in bankruptcy, family and matrimonial law, estate planning and litigation. Ms. Mann’s office is in Riverdale, New Jersey. She may be reached via phone at 973-506-4881 and email at Her website is

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