A critical federal student loan discharge program has rapidly become mired in widespread administrative problems, warned a major national consumer rights group. The issues, which have arisen as the Department of Education shifted the program’s processing operations to a new system, have led to significant problems for medically vulnerable borrowers who are entitled to relief under federal law.
The Total and Permanent Disability, or TPD, discharge program offers a pathway to student loan forgiveness for borrowers who are unable to maintain sufficient earnings from employment due to a disabling medical impairment. The program, which has enjoyed bipartisan support, is designed to provide relief to those who would not be able to repay their student loans because of a disability.
But the National Consumer Law Center, a consumer rights organization that advocates for student loan borrowers, said in a letter last week to the Department of Education that the new TPD Discharge processing system is failing borrowers at nearly every level, endangering their legal rights and effectively blocking them from accessing a discharge that they are legally entitled to receive. Here’s what student loan borrowers should know.
How Student Loan Forgiveness Under TPD Discharge Program Works
The TPD Discharge program can provide student loan forgiveness for borrowers who have severe and disabling medical impairments.
“If you’re totally and permanently disabled, you may qualify for a discharge of your federal student loans,” says Department of Education guidance on its website. There are three ways borrowers can qualify for TPD discharge relief:
- Veterans can qualify for student loan forgiveness under the TPD discharge program by providing documentation from the Veterans Administration they have received a VA disability determination reflecting a 100% disability;
- Social Security disability benefits recipients can qualify for relief if they have a medical review period of five to seven years, they have a disability onset date of at least five years ago, they have been receiving SSI or SSDI benefits for at least five years, or they qualify for SSDI or SSI based on a compassionate allowance;
- Other disabled student loan borrowers can be eligible for relief if they have a qualifying medical provider complete a TPD Discharge application form certifying that the borrower is unable to engage in substantial, gainful employment due to their medical condition, and providing details on the borrower’s diagnosis and limitations.
The TPD Discharge program has enjoyed bipartisan support. In 2019, the Trump administration facilitated a process to streamline discharge approvals for disabled veterans by implementing a data-sharing agreement between the VA and the Department of Education. More recently, in July of this year, President Trump signed the “One, Big, Beautiful Bill” passed by congressional Republicans that extended tax relief for student loan forgiveness under the TPD Discharge program, so that borrowers would still be entitled to tax-free discharges.
Backlogs And Administrative Problems Hindering Student Loan Forgiveness Processing For TPD Discharge Program
Earlier this year, the Department of Education completed a long-planned transition of the TPD Discharge program. For years, the program had been administered by Nelnet, a loan servicer contracted with the department. Under the new system, the department would administer the TPD Discharge program via a collection of private contractors operating under the branding umbrella of the Office of Federal Student Aid.
“On December 20, 2024, the Department announced that the TPD discharge program would transition from Nelnet to StudentAid.gov,” said the National Consumer Law Center, or NCLC, in its letter to the department last week. “Under the new USDS servicing environment, the Department’s Business Process Operations (BPO) vendors assumed responsibility for servicing TPD borrowers, including reviewing and processing individual discharge applications. While we welcome certain improvements—such as allowing borrowers and their designated representatives to submit TPD applications online—the transition has been rocky.”
NCLC noted that the TPD discharge processing system was shut down for several months during the transition, leading to a backlog of applications. When processing resumed, there was an extended pause on reviewing TPD discharge applications containing medical provider certifications. Now, processing has fully resumed, but NCLC outlined widespread problems with the new processing platform.
“The initial pause in TPD application processing—followed by the subsequent pause in processing medical certification forms—has created a storm of delays, miscommunications, and uncertainty for TPD borrowers,” wrote NCLC. Reported problems include:
- The Department of Education not notifying student loan servicers to place borrowers in a forbearance while their TPD Discharge applications are processed, which is required under federal regulations;
- The Department of Education and its contractors accusing student loan borrowers of not timely submitting TPD Discharge applications within 90 days of a medical provider’s signature, as required under federal regulations, even when borrowers or their advocates can prove an application was in fact timely submitted;
- The Department of Education and its contractors failing to provide updates or clear communications to borrowers or their advocates about a TPD Discharge application status, or its approval or denial;
- The Department of Education and its contractors failing to recognize a student loan borrower’s attorney or designated advocate, even when all parties have properly completed and submitted the required forms.
Some student loan borrower advocates are also reporting seemingly arbitrary or erroneous determinations by the department denying borrowers TPD Discharge relief.
“The Department must take immediate action to address the escalating problems with the TPD application process,” said NCLC in its letter. “This dysfunctional process is causing emotional stress and harm to many borrowers who suffer from grave disabilities and who are clearly eligible for a discharge.”
Student Loan Borrowers Applying For Relief Through TPD Discharge Program Have Limited Options
The Department of Education has not formally responded to NCLC’s letter outlining the reported problems with the TPD Discharge program. And the department’s TPD Discharge website provides no guidance to student loan borrowers on how to navigate the widespread application issues.
In the meantime, student loan borrowers struggling to navigate the new application system have limited options. The Trump administration cut the department’s staffing levels by nearly 50% last spring, contributing to ongoing backlogs and delays across a variety of programs, including at the department’s Ombudsman group, which handles borrower disputes. Congressional Republicans are considering additional cuts to the department’s budget, which could lead to even more staff reductions. The administration has also significantly curtailed operations at the Consumer Financial Protection Bureau, a federal watchdog agency that oversees the financial services sector, including student loan servicing.
Borrowers having trouble applying for student loan forgiveness relief through the TPD Discharge program can try contacting their congressperson or senator’s office for assistance and advocacy. And more than a dozen states have state-level student loan ombudsman offices that may be able to help.