What is a Total and permanent disability discharge?
A total and permanent disability (TPD) discharge cancels a borrower's remaining federal or private student loan balance when they cannot engage in substantial gainful activity due to a physical or mental impairment. Under the One Big Beautiful Bill Act, qualifying cancellations on account of death or total and permanent disability are permanently excluded from gross income under Section 108(f)(5), including private education loans. Employers reduce balances through a Qualified education assistance program before a TPD event to maximize combined tax-free relief.
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