Total and Permanent Disability discharge
The whole balance discharged, along with any TEACH Grant service obligation, on evidence of total and permanent disability.
What it takes
- One of three routes: a Department of Veterans Affairs rating of 100% service-connected disability or individual unemployability, a Social Security determination meeting the review-schedule tests, or certification by an authorised medical professional.
- Nothing at all in many cases. Quarterly data matches with the VA and Social Security trigger the discharge automatically, and a borrower who does not want it has to opt out.
What it does not cover
- A three-year monitoring period follows a discharge based on Social Security or a physician's certification, though not one based on a VA rating. Taking a new Direct Loan or TEACH Grant during it reinstates the debt.
- The old earned-income monitoring was removed in 2021 and no longer applies.
Federally tax-free
Permanently excluded from federal income for discharges after 31 December 2025, covering private loans as well, provided the borrower has a valid-for-employment Social Security number issued before the return is due. The Department's own page has not been updated for this and still implies these discharges became taxable in 2026, which is wrong.
State treatment is separate and this site does not guess at it. Check your state.
Sources
- Public Service Loan Forgiveness, U.S. Department of Education. Checked on . Backs the 120 qualifying payments and which plans qualify; that Tiered Standard payments do not qualify; the qualifying and non-qualifying employer categories; that the vacated employer rule has no effect.
- Teacher Loan Forgiveness, U.S. Department of Education. Checked on . Backs the $17,500 and $5,000 amounts and who each applies to; the five complete and consecutive years requirement; that the same service cannot count towards PSLF.
- Total and Permanent Disability discharge, U.S. Department of Education. Checked on . Backs the three qualification routes; the automatic discharge through quarterly data matches; the three-year monitoring period and that a VA-based discharge has none.
- Closed School discharge, U.S. Department of Education. Checked on . Backs the 180-day window and the automatic discharge one year after closure; the refund of payments and deletion of adverse credit history.
- Court actions affecting income-driven repayment, U.S. Department of Education. Checked on . Backs that the tax exclusion covered discharges from 1 January 2021 to 31 December 2025; that a milestone reached before 2026 remains covered if the discharge is processed later.
Checked on .