On August 19, 2021, the Department of Education announced that approximately 323,000 borrowers with a total and permanent disability would receive billions of automatic student loan discharges. As a result of the announcement, you may be wondering:

• How will automatic discharge work?
• Will the discharged loans be considered income?
• Who qualifies for automatic discharge?
• What steps need to be taken to receive a discharge?

If you or someone you know is disabled and believe you are eligible for automatic discharge but have not received it, contact Law Office of Simon Goldenberg, PLLC. To schedule a free, confidential consultation where an experienced attorney will review the facts of your situation and determine whether you are eligible for discharge, contact us at 888-301-0584 or online.

How Does Automatic Discharge Work?

In September 2021, eligible borrowers were identified as totally and permanently disabled based on data matching with Social Security Administration. Every quarter the Department of Education will automatically discharge the debt of eligible individuals through the Social Security Administration data.

How Will Borrowers Become Aware Of The Discharge?

If someone is found to be eligible for an automatic disability discharge, a borrower will receive written notification approving the discharge within weeks of the data being collected. In certain situations, borrowers who wish to opt out of their discharge are able.

Will The Discharged Loans Be Considered Income?

In some situations, the amount of discharged money may be considered income. If that is the case, the amount of taxes owed within the year the loan was discharged. You should contact your state tax office to fully understand if the discharge will be considered income under each state tax code.

However, for general purposes, if someone received a total and permanent disability discharge between January 1, 2018, and December 31, 2025, the discharge amount will likely not be considered income for federal tax purposes. On the other hand, if the discharge was fulfilled before January 1, 2018, the loan amount discharge might be regarded as income for federal tax purposes.

Who Qualifies For Automatic Discharge?

If you have been determined totally and permanently disabled, you may qualify for discharge of a Direct Loan, FEEL Loan, Federal Perkins Loan, or a TEACH Grant. Therefore, if you have been determined disabled and are receiving Social Security, and the quarterly scan identifies you as an eligible recipient for discharge, you will receive a notification.

What Steps Need To Be Taken To Receive A Discharge?

If you receive social security disability insurance or supplemental security income benefits, your next scheduled disability review will be within five to seven years. There are no affirmative actions necessary to receive a discharge. However, suppose you are receiving social security disability insurance or supplemental security income and have not received an automatic discharge. In that case, you may have more routes to get a student loan disability discharge.

How Are Disability Review Timeframes Determined?

The Department will know that a disability review will be within five to seven years, and you will have a "medical improvement not expected" status in your file.

Hiring A Consumer Debt Attorney In New York

If you or someone you know is disabled, you may be eligible for student loan discharge. However, suppose you believe you qualify and have not received an automatic discharge. In that case, it is important to contact an experienced attorney who can help walk you through the process of getting your student loans discharged to relieve yourself of the financial burden. To schedule a free consultation, contact Law Office of Simon Goldenberg, PLLC by calling us at 888-301-0584 or online.