I’m Working Disabled and is There Hope for My Student Loans?


Dear Steve,

I have $160,000 in student loan debt. it is a combination of subsidized, unsubsidized loans through the Dept of Ed and is being managed through Nelnet. I’ve been out of grad school for 7 years and used 3 years deferment and 4 years under the IBR program at a payment of zero because my income has been so low. One third of my total student loan bill is interest.

I called your toll free number and they told me they couldn’t help because Nelnet is a private company and I’m already in a program with them. I’ve never heard this before I was always told that Nelnet works for the Dept of Education?

I was homeless the past 2 years and I’m getting back on my feet. So I trying to figure out if I should stay on IBR even though I’ll probably have to start making payments in March or should I go to PAYE program. I know both have their own tax burden but I can’t decide which would be best with the amount of debt I owe.

Lastly, since I’ve had income hardship, mental health issue, etc is there any possibility of any portion of my student loan debt to get forgiveness even though I’m a working disabled person?



Dear Heather,

First off, I’m sorry the person who told you Nelnet is beyond help, gave you that advice. Nelnet is a private company but they are a servicer of federal student loans. I guess everyone has a bad day.

Both PAYE and IBR have similar options. PAYE however is only for 20-years and IBR can be for either 20 or 25 years depending on when you borrowed.

You can switch income driven repayment programs as you want. In looking at the list of loans you send me it does not appear they have all been consolidated into a new direct loan. If you have not done that, you should consider it. You can then select which income program you want to repay your loans under.

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The Department of Education has an online repayment estimator you can use to compare your loan repayment options. It’s a great tool and will help you to decide which path you want to follow.

As far as the interest building, it sure will. You will wind up owing much more using an income driven plan. See my article Why Income Based Student Loan Payments Can Be a Terrible Trap. But it is a fate better than default. It is by no means a perfect solution but it is a current solution.

I applaud your ability to move forward even though you’ve faced hardships. The only forgiveness program for those with disabilities is the Total and Permanent Disability (TPD) Discharge. And again, it is far from a perfect program.

In the ultimate irony, the TPD program is administered by Nelnet.

The big hurdle for you is demonstrating you are totally disabled and being a working disabled person. Then there is the issue of the TPD program and tax liability.

But the path you’d probably have to pursue would be a physician certification to qualify. “Alternatively, to show that you are totally and permanently disabled for the purposes of this discharge, you may submit the TPD discharge application with a certification from a physician that shows you are unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment that (1) can be expected to result in death; (2) has lasted for a continuous period of not less than 60 months; or (3) can be expected to last for a continuous period of not less than 60 months.

“Substantial gainful activity” is a level of work performed for pay or profit that involves doing significant physical and/or mental activities.” – Source

I’ve seen some with mental health and physical issues qualify but you would know if you think your particular situation would qualify.

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4 thoughts on “I’m Working Disabled and is There Hope for My Student Loans?”

  1. Thanks, Steve. You made a good point about consolidation. I was always told to not look into consolidation unless you can make significant payments towards the new loan. Is that true? Can I still be in an income based repayment program and consolidate my loans?

    As a side note, I want to rebuild my credit score. It’s been 2 years since my bankruptcy discharge and I’ve been getting credit card offers again after I started a new job. Should I bother before I get student loans consolidated? Will consolidation look better on my credit report to get approved by a regular credit card or would you go with a secured card?

    • The prefered path is to consolidate all the loans and drop them into an income driven repayment. Here is what the Dept of Ed says to do because it will give you one income based payment to make each month.

      “You apply for a Direct Consolidation Loan through StudentLoans.gov. This process offers both electronic and paper options. You can complete the electronic application as explained below or you can download and print a paper application from StudentLoans.gov for submission by U.S. mail.

      Once you sign in to StudentLoans.gov, you will be able to electronically complete the Federal Direct Consolidation Loan Application and Promissory Note. The electronic application on StudentLoans.gov consists of the following five steps:

      1. Choose Loans & Servicer
      2. Repayment Plan Selection – IBR, PAYE, etc.
      3. Terms & Conditions
      4. Borrower & Reference Information
      5. Review & Sign

      After you submit your application electronically via StudentLoans.gov or by mailing a paper application, the consolidation servicer selected will complete the actions required to consolidate your eligible loans. The consolidation servicer will be your point of contact for any questions you may have related to your consolidation application.

      It is critical that you continue making payments, if required, to the holders or servicers of the loans you want to consolidate until your consolidation servicer informs you that the underlying loans have been paid off.”

      Regarding your post bankruptcy recovery, you should get going on this right away because if you started after the bankruptcy you’d already have great credit by now. Please read https://getoutofdebt.org//48984/life-after-bankruptcy-how-quickly-have-great-credit-mistakes-avoid


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