How to Manage Student Loans When Caring for a Child with Disabilities

I distinctly remember how happy and excited I felt when I found out that I was going to be a father of twins. After rejoicing at seeing both babies on the ultrasound screen, my next thought as a student loan consultant was, “Oh no! I’m now behind on my college savings plan.” 

Both babies were delivered healthy, according to most metrics. Eventually, around one year old, both non-verbal boys were officially diagnosed with autism. That initial vision of life as a father of twins greatly contrasts with my reality of being a parent of not one, but two children with special needs. 

This might sound familiar to you if you’re a special needs parent, especially as you navigate the realities of what this journey involves (constant therapy appointments, managing different behaviors, doctor’s appointments, IEPs, becoming litigious with your local school system and/or insurance provider, etc.).

Repaying student loan debt adds another layer to the equation. Here’s what student loan borrowers who have children with disabilities should know about managing their federal student loans.

Parents can’t rely on TPD discharge for their education loans

Parents who borrowed loans for their own education might find themselves in a challenging position. Since taking care of a special needs child is a job in itself, many parents are forced to drastically reduce their working hours, take lower-paying jobs that provide increased flexibility, or exit the workforce entirely to care for their child. 

Unfortunately, all current disability-related discharge benefits through the Total and Permanent Disability (TPD) Discharge program are only available to the actual borrower. 

This can be very difficult financially and emotionally for borrowers who spent years acquiring a specialized education. No one plans on going to law school, for example, to subsequently become an unemployed at-home caregiver of a disabled child. Even if your child requires your 24-hour supervision, which necessitates a reduction or elimination of your employment abilities, you must still make loan payments — and the current rules do not provide you with any special paths toward forgiveness. 

TPD discharge rules and protections are only available to federal student loan borrowers who have a disability or have become disabled. In short, the disability of your dependent, regardless of the impact on your earning potential, does not qualify for TBD. Although there is proposed legislation to essentially extend TPD discharge to private loans, they are not subject to TPD rules if the borrower becomes disabled, regardless of who the borrower is.

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Student loans borrowed for your special needs child’s education 

Many parents essentially utilize two types of federal loans to help pay for their child’s college education: loans under their child’s name and Direct PLUS Loans under a parent’s name.

Loans borrowed by your special needs student might be dischargeable

All federal loans borrowed by children can usually immediately access an income-driven repayment (IDR) plan or are simply one consolidation process away from accessing IDR. Additionally, student borrowers who are disabled or become disabled are eligible for all TPD discharge benefits.

To see if your child qualifies for TPD, visit the Disability Discharge Resource Center at StudentAid.gov.

Keep federal Parent PLUS Loans to a minimum

For any parents seeking the best financial outcome for their special needs child’s education, my general recommendation (when only looking at the financial impact of student loans) is finding a school that minimizes the need to borrow Parent PLUS Loans. 

This way, TPD discharge is available, if needed, following the completion of your child’s program with minimal Parent PLUS obligation.

Parent PLUS Loans are borrowed under a parent’s name and are not transferable amongst individuals, regardless of relationship (e.g., spouse, children, etc.). They behave similarly to the first scenario described above. Unless the parent becomes disabled, these loans require repayment akin to all other federal student loans.

Your options as a special needs parent with student debt

Student loan borrowers who have children with disabilities — and have their own student loans or Parent PLUS Loans — can approach their debt in different ways. Some options include:

• Public Service Loan Forgiveness (PSLF). If you are employed full-time with a nonprofit or government entity or are considering it, explore how PSLF can unlock forgiveness.
• The double-consolidation loophole. Parent PLUS borrowers, in general, are generally restricted to only one of the four IDR plans, called the Income-Contingent Repayment plan. To access an IDR plan with lower payments, you’ll likely need to complete a Parent PLUS Loan double-consolidation.

Consider which repayment option is best for you (e.g., enrolling in IDR, standard repayment, or student loan refinancing), the best tax filing status for your family’s financial situation, and whether consolidation might be necessary. 

Being a special needs parent is rewarding but hard, and student loans make that duty harder. I am highly empathetic to your situation as a special needs parent myself. 

We at Student Loan Planner are here to support you toward your student loan repayment goal. Our team of experts is certified and trained to develop a personalized repayment plan that’s unique to your family situation. Contact a student loan consultant today.