SSDI and Student Loans: Forgiveness, Garnishment & Eligibility

• You can get federal student loans forgiven through a Total and Permanent Disability discharge if your SSDI status matches specific disability categories.

• Your SSDI benefits can be garnished if your federal student loans default, but options like rehabilitation and loan consolidation can quickly stop garnishment.

• You can still borrow student loans while receiving SSDI, though special restrictions apply if you’ve previously had a TPD discharge.

Federal student loans can be forgiven for recipients of Social Security Disability Insurance (SSDI) — a federal benefit program providing financial support to people who can’t work due to disability — through a process known as Total and Permanent Disability (TPD) discharge. As of July 1, 2023, the U.S. Department of Education streamlined this process, expanding automatic eligibility for SSDI and Supplemental Security Income (SSI) recipients under specific disability categories.

Related: What Disabilities Qualify for Student Loan Forgiveness?

Borrowers automatically qualify for TPD discharge if identified in Social Security Administration (SSA) records under one of four categories:

• Individuals whose medical conditions are designated as “Medical Improvement Not Expected” (MINE).

• Those classified as “Medical Improvement Possible” (MIP) after at least one renewal period.

• Borrowers with severe conditions recognized under SSA’s Compassionate Allowances.

• Individuals who’ve been disabled for five or more consecutive years.

This expanded automatic eligibility followed a July 2022 policy change. Initially, automatic discharges applied only to borrowers designated as MINE. By July 2023, the automatic discharge expanded further after the Department of Education finalized a comprehensive data-sharing agreement with SSA.

If you believe you qualify but have not received automatic discharge, you should proactively apply for a TPD discharge. You’ll need to submit documentation from SSA, such as a Benefits Planning Query (BPQY), Notice of Award, or another official confirmation of disability benefits. If you cannot obtain SSA documentation, you can instead provide certification from a qualified medical professional, as detailed in the government’s TPD guidelines.

Social Security Disability Insurance benefits can be garnished to repay defaulted federal student loans. This garnishment, known as an offset, is authorized by the Debt Collection Improvement Act (DCIA) of 1996, allowing the government to collect debts through administrative offset of certain federal benefits, including SSDI.

However, garnishment protections exist:

• SSI benefits are fully exempt from garnishment.

• SSDI payments have partial protection, limiting garnishment to amounts above $750 per month ($9,000 annually). This garnishment limit has not been adjusted for inflation since its establishment in 1996, potentially placing beneficiaries close to or below the federal poverty guidelines.

If your SSDI benefits are subject to garnishment, you’ll receive an offset notice detailing the action. To confirm whether your benefits may be garnished, contact the U.S. Department of the Treasury’s automated toll-free number at 800-304-3107.

How to Stop SSDI Garnishment for Student Loans

You have options to stop garnishment and resolve student loan default:

• Loan rehabilitation allows you to remove the default after making nine monthly payments based on your income and expenses.

• Loan consolidation immediately removes the default status by allowing you to enroll directly into an income-driven repayment (IDR) plan, stopping garnishment promptly.

For more details on garnishment of other Social Security benefits, see our related article: Can Social Security Be Garnished for Student Loans?.

Borrowing After a TPD Discharge

Borrowers who’ve received a Total and Permanent Disability discharge for federal student loans face specific restrictions. After a TPD discharge, there’s a three-year reinstatement period during which they cannot take out new federal student loans, including Perkins, FFEL, Direct Loans, or TEACH Grants. However, borrowers may still be eligible for Direct Consolidation Loans or FFEL Program loans if these loans don’t include any previously discharged loans.

During this reinstatement period, private student loans remain accessible. Approval for private loans generally requires good credit and adequate income, meaning borrowers often need a creditworthy cosigner.

Borrowing Without a Previous Discharge

SSDI recipients who haven’t previously received a TPD discharge can freely apply for federal student loans. When applying, borrowers must complete the Free Application for Federal Student Aid (FAFSA). SSDI income typically isn’t taxable and does not negatively impact eligibility for federal student aid. However, to maintain eligibility, borrowers must meet satisfactory academic progress requirements, earn sufficient credits, and maintain minimum GPA standards set by their educational institution.