When a TPD Discharge Is Final

A Total and Permanent Disability (TPD) discharge is final once the Department of Education approves it and applies the discharge to your loans.

There is no post-discharge income monitoring. As of July 1, 2023, borrowers are not placed in a conditional status after approval, and the Department does not track earnings or require follow-up income reporting.

If your discharge is approved based on a medical professional’s certification or a Social Security disability determination:

• Your eligible federal student loans are discharged.

• No follow-up documentation is required.

• Your income does not affect the discharge later.

Approval ends the discharge process. The only remaining risk is a narrow reinstatement rule that applies in limited circumstances.

Yes. You can work after a TPD discharge.

Returning to work, earning income, or working full-time does not put your discharge at risk. The Department of Education does not track wages and does not reassess a discharge based on employment or earnings.

The only remaining restriction after discharge is unrelated to work or income. It concerns whether you take out new federal student loans within a limited period after approval.

Related: How to Apply for a Total and Permanent Disability (TPD) Discharge

After a TPD discharge, there is a limited three-year reinstatement window.

For borrowers whose loans are discharged based on a medical professional’s certification or a Social Security disability determination, reinstatement can occur only if the borrower takes out new federal student loans or a TEACH Grant within three years of the discharge date.

If no new federal aid is taken during that three-year period, there is no reinstatement risk.

Borrowers whose loans are discharged based on a VA disability determination are not subject to reinstatement. The three-year rule does not apply to VA-based discharges.

Related: Who Qualifies for Disability-Based Student Loan Forgiveness

After a TPD discharge, taking out new federal student loans can trigger reinstatement, while private loans do not.

During the first three years after discharge, borrowers generally may not take out new federal student loans or TEACH Grants. Taking out new federal aid during this period is the only action that can trigger reinstatement.

During this same period, borrowers may still:

• Attend school without federal aid

• Take out private student loans

• Receive a federal consolidation loan, as long as it does not include any discharged loans

Once the three-year period ends, borrowers may again take out new federal student loans without TPD-related restrictions.

Related: Private Student Loan Disability Discharge

If a TPD discharge is reinstated, it does not happen without notice.

The Department of Education must send written notice explaining why the loans are being reinstated and when repayment will resume. The first payment cannot be due earlier than 90 days after that notice is sent.

No interest is charged between the original discharge date and the reinstatement date. Interest begins accruing again only after the loans are reinstated.

After a TPD discharge is approved, the discharged federal student loans should be reported as discharged with a zero balance on your credit reports.

Credit reporting does not update immediately. It often takes time for the discharge to process and appear correctly across all credit bureaus.

Once reporting is accurate, you should see a $0 balance and an account status showing the loans as discharged rather than delinquent or in default.

A TPD discharge does not remove accurate negative history from before the discharge. Late payments or defaults that occurred earlier may still appear.

A disability discharge does not create a federal tax bill.

Federal law permanently excludes student loans discharged due to total and permanent disability from federal taxable income. The discharged balance is not treated as income for federal tax purposes.

State tax treatment varies. Some states follow federal law automatically, while others do not. Whether a TPD discharge is taxable at the state level depends on state law in the year the discharge occurs.

• StudentAid.gov — Total and Permanent Disability Discharge

• 34 C.F.R. § 685.213 — Total and Permanent Disability

• IRS — Student Loan Cancellations and Discharges