Student Loan Discharge

January 31, 2014

If you have student loans and are disabled, you may qualify for a discharge.  The government will consider whether you are “totally and permanently disabled” and may give you a “TPD discharge.”  Before your federal student loans are discharged you must provide information to the Department to show that you are totally and permanently disabled. The Department will evaluate the information and determine if you qualify for a TPD discharge.

If you think you might qualify and want to apply for a TPD discharge, you must provide the information the Department needs to make a determination by completing a TPD discharge application and gathering supporting documentation that shows you are totally and permanently disabled. Depending on your situation, you will either attach the supporting documentation to your application or have your physician complete Section 4 of your application. Once everything is complete, you’ll mail the discharge application and, if required, the supporting documentation to us.

A finding by the Social Security Administration that you are disabled is one of the methods used to determine if you qualify for a TPD discharge.  More specifically, if you are receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you can submit a Social Security Administration (SSA) notice of award for SSDI or SSI benefits stating that your next scheduled disability review will be within 5 to 7 years from the date of your most recent SSA disability determination.

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I am urging everyone, once again, to set up an account with the Social Security Administration.  If you are working, you can confirm that your earnings have been appropriately posted to your SSN and view current estimates on your disability and retirement benefit amounts.  If you are receiving benefits, you can verify your benefits with a benefit verification letter if you need to prove your income for a mortgage or other loan.  You can check the increases in your benefits on a yearly basis before letters outlining those benefits are sent out.

Go to http://www.ssa.gov and set up an account today.  It only takes about five minutes.

The New York Times reported that the expansion of Social Security benefits is an idea that should take hold.  In the past, the idea of increases to the program were met with disdain, but recently in Washington there has been talk that Social Security should be expanded, not cut. These ideas have even reached the Senate, with Tom Harkin introducing legislation that would increase benefits. Late last year, Senator Elizabeth Warren gave a stirring floor speech making the case for expanded benefits.

Where is this coming from? One answer is that the fiscal scolds driving the cut-Social-Security orthodoxy have, deservedly, lost a lot of credibility over the past few years. Beyond that, America’s overall retirement system is in big trouble. There’s just one part of that system that’s working well: Social Security. And this suggests that we should make that program stronger, not weaker.

When you look at today’s older Americans, you are in large part looking at the legacy of an economy that is no more. Many workers used to have defined-benefit retirement plans, plans in which their employers guaranteed a steady income after retirement. And a fair number of seniors (like my father, until he passed away a few months ago) are still collecting benefits from such plans.

Today, however, workers who have any retirement plan at all generally have defined-contribution plans — basically, 401(k)’s — in which employers put money into a tax-sheltered account that’s supposed to end up big enough to retire on. The trouble is that at this point it’s clear that the shift to 401(k)’s was a gigantic failure. Employers took advantage of the switch to surreptitiously cut benefits; investment returns have been far lower than workers were told to expect; and, to be fair, many people haven’t managed their money wisely.

As a result, we’re looking at a looming retirement crisis, with tens of millions of Americans facing a sharp decline in living standards at the end of their working lives. For many, the only thing protecting them from abject penury will be Social Security. Aren’t you glad we didn’t privatize the program?

So there’s a strong case for expanding, not contracting, Social Security. Yes, this would cost money, and it would require additional taxes — a suggestion that will horrify the fiscal scolds, who have been insisting that if we raise taxes at all, the proceeds must go to deficit reduction, not to making our lives better. But the fiscal scolds have been wrong about everything, and it’s time to start thinking outside their box.

Realistically, Social Security expansion won’t happen anytime soon. But it’s an idea that deserves to be on the table — and it’s a very good sign that it finally is.

 

Individuals who are nearing their early retirement who have largely stopped working have to decide whether to file for early retirement benefits or to delay taking benefits.  Whether to file or delay is a significant decision and it is impacted by many factors.  The thinking for healthy individuals who have a reasonable life expectancy is that they should wait.

The New York Times agrees.  Financial writer Tara Siegal Bernard writes:  Think about it this way. If you delay collecting your benefits, which can be claimed anywhere from age 62 to 70, the money you leave on the table each year is basically a payment for a much higher stream of lifetime income. And that money will buy significantly more income, perhaps 50 percent more for a couple, than buying an annuity through a commercial insurer.

“It’s almost a no-brainer,” said Steven A. Sass, program director of the Financial Security Project at the Center for Retirement Research at Boston College, who analyzed the numbers. “Depending on how long you delay, you will get an income equal to about 6 percent or more of the savings used to produce that income. You will get that income, rising with inflation, with no risk, sent to you by the U.S. government.”

Delaying benefits requires leaving sizable sums of money on the table, which, for many sixty-somethings, could be too difficult — psychologically or financially. Some want to start collecting what they’re owed, while others simply need the money to live on. And individuals who aren’t healthy should clearly start collecting benefits as soon as they’re eligible.

The full article is here:

http://www.nytimes.com/2013/11/16/your-money/the-payoff-in-waiting-to-collect-social-security.html?ref=socialsecurityus

 

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