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Dave Z
Dave Z, Mortgage Co. Operations Manager
Category: Finance
Satisfied Customers: 697
Experience:  Operations manager for a mortgage company, Member of OAMB & NAMB, 10+ yrs experience in mtg industry
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I filed for a student loan discharge three years ago. It ...

Customer Question

I filed for a student loan discharge three years ago. It is now listed in default. New appllications for permanent disability have been filed with board of education. If disaproved, can the Department of Education garnish my V.A. disabiity pay or my social security disability payments?
Submitted: 9 years ago.
Category: Finance
Expert:  Dave Z replied 9 years ago.

Good evening and welcome to Just Answer!

Unfortunately, as long as the student loans were obtained through a federal agency (such as the US Dept. of Edu), they may garnish your SSD and/or VA disability pay. Here are a few clips from a couple of different articles explaining this:

Can Social Security Disability benefits be garnished ?

Yes, social security disability benefits can be garnished. However, garnishment can only be carried out in a few specific scenarios. According to the social security administration, SSI benefits cannot be garnished, while social security disability benefits may only be garnished to enforce child and alimony obligations, pay federal tax and debts owed to the IRS, and pay debts owed to federal agencies.

So, if you owe taxes or IRS penalties, you can have your social security disability benefits garnished. If you have alimony or child support obligations, you can be garnished. If you have a delinquent student loan, your SSD benefits can be garnished.

Creditors, however, are not entitled to garnishment provisions for social security disability benefits, so SSD recipients are protected from credit card companies, finance companies, auto lenders, and other lenders. Click here


Hardship Caused by Offset of Social Security Benefits, Federal and/or State Income Tax Refunds, or Other Payments

Before the Department referred your defaulted student loan(s) or grant claim(s) to the Department of the Treasury for offset, the Department offered you - either directly or through the guaranty agency that holds your loan - an opportunity to avoid offset by either agreeing to repay the debt or proving that you do not owe the debt. As explained in that notice, unless you took one of these actions by the 65-day deadline, the Department would request that any federal and/or state tax refunds and other payments owed to you, be withheld and applied to satisfy the debt.

If you claim that this withholding action is causing you and your dependents financial hardship, the Department may consider modifying or suspending withholding action. To present your claim, you must contact the Department or the guaranty agency that holds your debt, and must submit documentation satisfactory to the holder of the debt to support your claim. The Department or the guaranty agency, as its designated representative, will consider your claim and may agree to modify the withholding action. You may be required to complete a statement of financial status, which you can download now. Click here

Here is one more section of information pertaining to your exact issue:

What does discharged mean?

Discharged means that you don't have to repay the loans; no further payment is necessary.

How do I get my student loan discharged under Total and Permanent disability?

Fill out the Total and Permanent Disability Discharge form. A physicXXXXX XXXXXcensed in the United States must certify your total and permanent disability by providing information on the form and signing it. Send the form to your lender for approval; then the Department of Education reviews your information and determines final eligibility.

Are there forms to fill out?

Yes, you must submit a form called: Loan Discharge Application: Total and Permanent Disability (TPD application). You must complete sections 1 and 2. Your medical doctor or doctor of osteopathy must certify that you have a disabling condition that; a) is expected to last indefinitely or result in death AND, b) prevents you working and earning money in any capacity. The form must be certified by a physician or doctor of osteopathy who is licensed to practice in one of the 50 United States or the District of Columbia.

Who do I contact to file my disability status?

You must submit a TPD application to each loan holder.

Who determines whether or not I'm disabled?

Your doctor certifies whether you have a disabling condition that is expected to last indefinitely or result in death, and prevents you from working. Following this certification, the Department of Education's (ED) Conditional Disability Discharge Unit determines eligibility for discharge of the loan balance. Their decision is final.

I have a partial disability that affects my employment. Is my loan dischargeable?

No. Loans are discharged when an individual is totally and permanently disabled, unable to work and earn money in any capacity and approved by Department of Education (based on eligibility criteria for discharge of Federal student loans).

If I am approved as eligible for TPD discharge, is my loan discharged from the date of eligibility or from the unable to work date?

It is discharged from the unable to work date.

How long will the process take?

The eligibility and loan discharge process can take more than one year.

Can I appeal a determination?

No. Current regulations do not provide for appeals of determinations made by the Department of Education. However, you can reapply with your loan holder or guaranty agency if you believe that your situation has changed.

I receive Social Security (or VA) disability benefits now. Does that mean I am eligible for disability discharge of my loan balance?

No. Eligibility for Social Security or VA disability benefits does not mean you are automatically eligible for TPD discharge. Click Here

I am sorry this is probably not the information you were hoping to hear, but if your disability is permanent you should be fine. Also if the garnishment would cause undue hardship, you should be fine as well. I truly wish you the best of luck with your situation and I hope it turns out all well in the end. Please let me know if I can be of any further assistance. Thank you for using Just Answer and please remember to leave feedback after you click the Green Accept button. Have a great weekend.

Dave Z and other Finance Specialists are ready to help you
Customer: replied 9 years ago.
Thank you for your assistance. Your answer was extreemly helpful.

Expert:  Dave Z replied 9 years ago.

Thank you for accepting my answer and for the gracious bonus, they are both greatly appreciated. I am glad that I was able to help you out, and please let me know if there is ever anything else that I can do for you. Have a great weekend and best of luck with everything.