Administrative Discharge

What is an Administrative Discharge?

An administrative discharge relieves you from having to repay a federal student loan on the basis of your total and permanent disability. Before your federal student loans can be discharged, you must provide information to the U.S. Department of Education showing that you are totally and permanently disabled. Then the Department will evaluate the information to determine if you qualify for an administrative discharge. If you want to apply for an administrative discharge, you must complete an administrative discharge application and gather supporting documentation that show you are totally and permanently disabled.

Administrative Discharge FAQs

  1. What is the difference between a Federal and private student loan? Federal: Federal loan promissory notes and applications will state the name of the Federal loan program (Stafford, PLUS, Perkins, FFEL, William D. Ford Direct Loan Program, etc.) at the top of your monthly bill and loan contract. These loans are backed by the U.S. Department of Education. Private: Private student loans are backed by a bank or private student loan servicer. Most private student loans will have a disclosure statement similar to the information that is included on mortgage loans and car loans. Most private loans are covered by the Truth in Lending Act while federal loans are not.
  2. Are there any tax implications after approval and discharge of my federal student loans? The U.S. Department of Education reports the discharge of any loan debt totaling $600.00 or more to the Internal Revenue Service (IRS) for the year that the loan was discharged. If your loans are discharged, you will receive an IRS Form 1099-C that will identify the total amount of your discharged debt. The amount of the discharged debt will be considered income for federal tax purposes and possibly for state tax purposes. You may want to consult with a tax professional to determine how this may affect your personal taxes.
  3. I have a disability that prevents me from working in the occupation for which I was trained. Can I get a discharge? To be eligible for an administrative discharge, your disability must make you unable to engage in any substantial gainful activity, as defined above. If your disability prevents you from working in the occupation for which you were trained, but you are able to engage in substantial gainful activity involving a different type of work, you would not qualify for an administrative discharge.

Determination of Total and Permanent Disability

How is the Status of Total and Permanent Disability Determined?

To be determined to have a total and permanent disability it must be shown that you are unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that can be expected to result in death or that has lasted for a continuous period of no less than 60 months or can be expected to last for a continuous period of no less than 60 months.

How Can an Attorney Help

How Can An Attorney Help?

The administrative discharge process for your federal student loans can be a daunting task as the application process requires substantial documentation and monitoring throughout. Hoglund Law Office can assist you in streamlining the discharge process by being appointed as your representative, gathering the required documentation, preparing your application for discharge and monitoring your application to ensure the administrative discharge process is simple and successful for you. In order to determine whether Hoglund Law Office can assist you through this process, please call our main office at 855-780-4357.

Process Timeline

>How Long Does the Process Take?

Once received, the U.S. Department of Education will review your administrative discharge application. This typically takes less than 30 days. Incomplete discharge applications and, if applicable, the response time of your physician can delay the review process. If you showed the U.S. Department of Education that you are totally and permanently disabled based on SSA documentation or a physician certification and the U.S. Department of Education approves your discharge request, you will be subject to a 3-year post-discharge monitoring period that begins on the date the discharge is approved. There are requirements that you must meet during the post-discharge monitoring period. If you are approved for an administrative discharge based on a VA determination of unemployability due to a service-connected disability, you will not be subject to a 3-year post-discharge monitoring period.

Proof of Total and Permanent Disability

How Do I Prove that I am Totally and Permanently Disabled?

You can prove that you are totally and permanently disabled in one of the following three ways:

  1. If you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can submit a Social Security Administration (SSA) notice of award for SSDI or SSI benefits stating that your next scheduled disability review will be within 5 to 7 years from the date of your most recent SSA disability determination.
  2. If you are a veteran, you can submit documentation from the U.S. Department of Veterans Affairs (VA) showing that the VA has determined that you are unemployable due to a service-connected disability.
  3. You can submit certification from a physician that you are totally and permanently disabled. Your physician must certify that you are unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that can be expected to result in death or has lasted for a continuous period of no less than 60 months or can be expected to last for a continuous period of no less than 60 months.

Requirements for Determination to be Disabled by Physician Certification

What are the Administrative Discharge Requirements for a Person Determined to be Disabled by Physician Certification?

You can submit certification from a physician that you are totally and permanently disabled. Your physician must certify that you are unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that can be expected to result in death or has lasted for a continuous period of no less than 60 months or can be expected to last for a continuous period of no less than 60 months. Only a doctor of medicine (M.D.) or osteopathy (D.O.) licensed to practice in the United States may certify your total and permanent disability.

Requirements for Determination to be Disabled by VA

What are the Administrative Discharge Requirements for a Person Determined to be Disabled by U.S. Department of Veterans Affairs (VA)?

If you get VA benefits for a service-connected disability, you will qualify for a discharge if you can provide documentation from the VA showing:

  1. You have a service connected disability or disabilities, that are 100% disabling; or
  2. You are totally disabled based on an individual unemployability determination.

Requirements if Receiving SSDI or SSI

What are the Administrative Discharge Requirements

For A Person Receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) Benefits?

The Department of Education’s standard for administrative discharge may differ from disability standards used by other federal agencies or by state agencies. You can demonstrate your total and permanent disability through the use of your SSA notice of award for SSDI or SSI benefits only if the award statement shows that your next scheduled disability review will be within 5 to 7 years from the date of your most recent SSA disability determination. If your SSA notice of award does not indicate when your next scheduled disability review will occur, you can obtain this information by calling your local SSA office and requesting a Benefits Planning Query. The Benefits Planning Query will show when your next review is scheduled to occur.

Substantial Gainful Activity

What does Substantial Gainful Activity Mean?

Substantial gainful activity means that you are able to perform a level of work for pay or profit that involves doing significant physical or mental activities or a combination of both.

Types of Student Loans Included in Application

What types of student loans can be included in the Administrative Discharge Application?

The types of loans that can be included in an application for administrative discharge are as follows: Federal Direct Loans, Federal Family Education Loan (FFEL), Federal Perkins Loans and/or TEACH Grant Service obligations.