Can the Government Take My Disability Benefits to Repay Student Loans?

 Posted on December 29, 2016 in Social Security Disability

Social Security disability benefits provide desperately needed income to individuals who are unable to work. Unfortunately, many people find that what the federal government gives, it can also take away. Specifically, many Social Security disability recipients have seen their benefits reduced to pay off pre-existing student loan debts.

GAO Finds Elderly Disability Recipients Still Paying Off Loans

The federal government guarantees student loans through a number of programs administered by the U.S. Department of Education. One consequence of these guarantees is that student loan debt is very difficult to eliminate. Unlike most consumer debts, student loans generally cannot be discharged in bankruptcy. Additionally, even when the debtor is on disability and living below the poverty line, the government may still take action to collect loan payments.

Recently, the Washington Post cited a report from the U.S. Government Accountability Office, the auditing arm of Congress, that found the Treasury Department was “garnishing the benefits of 114,000 people age 50 and older in the past year, more than half of whom were receiving Social Security disability rather than retirement income.” The GAO found that more than 67,000 of these garnishees received benefits “below the poverty guideline, which is set at about $990 a month for a single adult.” And while there is a limit—15 percent—on how much of a person's disability benefits the government can seize for student loan payments, this threshold “has never been adjusted to reflect the increased cost of living.”

It may sound incredible that people over the age of 50 are still carrying college loan debt, but in fact the GAO said “nearly half of borrowers age 50 or older had held their student loans for 20 years or more” and still owed less than $10,000.

Seeking a Total and Permanent Disability Discharge

In an attempt to remedy this situation, the White House and the Social Security Administration announced plans earlier this year to “forgive” nearly $8 billion in outstanding student loans held by disability recipients. Technically known as a total and permanent disability (TPD) discharge, this relieves a debtor of any further obligation to repay the following types of loans:

• William D. Ford Federal Direct Loan;
• Federal Family Education Loan;
• Federal Perkins Loan; and
• TEACH Grant service obligation.

In order to qualify for a TPD, a debtor must submit proof of disability, which includes a notice of award of either Social Security Disability Insurance or Supplemental Security Income benefits. Alternatively, military veterans can submit documentation from the U.S. Department of Veterans Affairs certifying they are unable to work due to a “service-connected disability.” Moreover, individuals who are not receiving government disability benefits can still seek a TLP by submitting a doctor's certification that they are “unable to engage in any substantial gainful activity” due to a medical impairment that has lasted for at least five years or is “expected to result in death.”

Get Help With Your Disability Case

Applying for disability benefits is an arduous process on its own. The last thing you need is to succeed in receiving benefits only to find them taken away due to an old student loan debt. A knowledgeable Chicago disability benefits lawyer can help. Contact the offices of Pearson Disability Law, LLC to speak with an attorney right away.

Sources:

https://www.washingtonpost.com/news/grade-point/wp/2016/12/20/the-disturbing-trend-of-people-losing-social-security-benefits-to-student-debt/

https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/disability-discharge