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Active service members, veterans, and disabled veterans have many VA debt relief programs available to ease the burden of debt. Programs like Total and Permanent Disability Discharge are designed to make it easier for you to manage your finances by forgiving your student loans and more.

Knowing your options will make it easier for you to determine what you are eligible for. Even if you don’t qualify for debt forgiveness, there are other options for debt relief.

How Can Debt Forgiveness Help Disabled Veterans?

Disabled veterans face many financial challenges when it comes to managing their finances. From trying to pay off their loans to finding suitable housing to accommodate any mobility issues they may have, readjusting to civilian life can be difficult. Fortunately, there are a number of programs and resources available to choose from to make things easier.

Disabled veteran debt forgiveness can erase some or all of your debt, so you won’t have to repay it. This means you’ll have more money available to take of other, more pressing needs such as health care costs, groceries, and housing.

“Between the GI Bill, the National Defense Student Loan Discharge, and the Public Service Loan Forgiveness programs, military service is one of the very best ways available to fund one’s higher education and technical training goals,” adds Brad Reichert, debt expert and Founder and Manging Director of Reichert Asset Management LLC. 

Are You Eligible for VA Debt Forgiveness?

Your eligibility for VA debt forgiveness will depend on the type of program you’re applying for. Debt forgiveness comes in many forms, such as student debt forgiveness through the Public Service Loan Forgiveness Program, debt settlement, and more. Start by determining what debts you have and which programs you’d like to apply for.

If you’re applying for the Public Service Loan Forgiveness program, for example, you must have made 120 qualifying payments while working full-time for a nonprofit organization or government agency.

If you’re applying for a debt settlement program to erase some of your unsecured debts like credit card balances, payday loans, or personal loans, you may be eligible to enroll if you have more than $10,000 in debts.

How To Apply for Disabled Veteran Debt Forgiveness

The application and discharge process for debt forgiveness will vary depending on the program you’re applying for. Total and Permanent Disability (TPD) discharge program is one of the most trusted disabled veteran debt forgiveness programs. Here’s how you can apply for it to get your student loans erased:

  1. Fill out a discharge application.
  2. Attach documents from the VA that demonstrate that you have received a VA disability determination. You can also provide your Social Security Administration’s notice of award (NOA) or your Benefits Planning Query.
  3. Send the application and the supporting documents to the TPD discharge servicer, Nelnet. You can also designate an organization or individual to complete your TPD discharge application and submit it on your behalf.  

Check the application process for other debt forgiveness programs on the website of the organization offering the benefit.

As a disabled VA, there are several regulations and laws in place to protect you from the negative effects of debt. One such federal law is the Servicemembers Civil Relief Act (SCRA). This federal law protects not just disabled veterans but also active servicemembers and other veterans.

The following are some of the protections that you can get as a part of this federal law:

  • Interest rate is capped at a maximum of 6% for credit card debt, auto loans, home loans, or student loans you might have taken out before you became a servicemember.
  • Protections against wage garnishments and collection activities.
  • Protection against eviction without a court order.
  • Protection against foreclosures and repossessions without a court order.

Additionally, the U.S. Department of Veterans Affairs introduced a new rule in February 2022 that changes the way the department reports benefit debts and medical debt to credit bureaus. Reporting debts impacts the creditworthiness of the borrower and causes financial distress for veterans.

Nonpayment and late remittance can also lead to debt collection. But when the VA debt exists because of overpayment of benefits, it’s through no fault of the borrower. This new rule will reduce unfavorable debt reported to credit bureaus by 99%.  

Resources for Disabled Veteran Debt Forgiveness

If you’re a disabled veteran seeking financial assistance and debt forgiveness, start with the website of the U.S. Department of Veterans Affairs, which offers a wide range of benefits and support. You may be eligible for monthly disability compensation if you have a service-related disability. Here are a few other resources to explore:

Types of Debt Forgiveness Programs

Depending on the type of loan you have and your disability status, you may be eligible for a disabled veteran debt forgiveness program. Here’s a list of the different programs currently available for disabled veterans.

Total and Permanent Disability (TPD) Discharge

The Total and Permanent Disability (TPD) discharge program is available to those who are totally and permanently disabled. In 2019, President Trump signed an executive order streamlining the TPD discharge process. Later, in 2021, President Biden expanded automatic loan forgiveness to qualifying veterans.

You may qualify for a discharge of your federal student loan debt and your TEACH obligation. If you receive a discharge, you won’t have to pay the Federal Perkins Loans, FFEL program loans, and Direct Loan program loans.

To qualify for the program, you must submit documents that show that you meet the program’s requirements of being permanently and totally disabled, along with an application form. Military spouses can also qualify for this program if they are permanently and totally disabled, but they won’t receive a discharge if they’re caring for disabled partners.

Federal taxes on discharged loans are waived through 2025 by the IRS, but state tax policies vary. Check your state’s tax rules to confirm whether you owe taxes on forgiven debt.

VA Benefit Waivers

If you have debt because of VA benefit overpayment, applying for a waiver can be an option. A waiver means that the VA will agree to waive or forgive a VA benefit debt related to education, non-service-related pension, and VA disability compensation. If you can’t afford to pay off the full debt balance with smaller monthly payments, the VA may waive off all or part of the debt.

You must request a waiver within 30 days of receiving a VA debt letter for education debts and within 90 days for other types of debt. The VA will pause collections while your request is under review. You’ll need to submit a Financial Status Report and a personal statement that explains why the VA should forgive your debt.

Public Service Loan Forgiveness (PSLF)

If you have federal student loans, you can apply for the Public Service Loan Forgiveness (PSLF) program after you have made 120 qualifying monthly payments. The program only applies if you’re employed by a nonprofit organization or a government agency for at least ten years.

If you qualify for the program, the remaining student loan balance will be erased without credit damage or penalties.

National Defense Student Loan Discharge (Expired)

While the National Defense Student Loan Discharge program has been discontinued, service members may qualify for military student loan repayment programs, such as the Army College Loan Repayment Program (LRP) or the Navy Student Loan Repayment Program.

If you're in the military and looking for student loan assistance, it’s best to consult your branch’s education services officer or a student loan advisor to explore the options that fit your situation.

Debt Settlement

If you have unsecured debt like credit cards, personal loans, title loans, and payday loans, one way to get debt forgiveness for a portion of your debt is through debt settlement. You can work with a debt settlement company that will negotiate with your lenders on your behalf.

If the lender agrees, you’ll only pay a portion of your total debt, but the settled amount may be reported as taxable income. If you’re at risk of bankruptcy, this may be a viable option to consider.

The Bottom Line on Disabled Veteran Debt Forgiveness

If you have served in the military and have a service-connected disability, there are many pathways to debt forgiveness. Explore all your options and learn more about debt relief techniques that may reduce your payments and ease your debt stress.

Dealing with debt will free up money that you can use to improve the quality of your life and invest in your future financial goals.