Total  Permanent Disability

Total Permanent Disability PowerPoint PPT Presentation


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Disability Scenarios. The student applied after July 1, 2002, and the conditional period is over.(a) The student has been granted the permanent and total disability discharge by the Dept. of Education after the 3-year conditional period.(b) The student has been denied the permanent and total disability discharge by the Dept. of Education after the 3-year conditional period.On NSLDS, if loans are in

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Total Permanent Disability

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1. Total & Permanent Disability A student comes into the FAO and wants a loan, but has previously filed for disability. Check NSLDS and look for “DI” status. These are the possibilities: The student had his/her loans completely discharged before July 1, 2002. The student applied for disability after July 1, 2002, and is now in a “conditional” status.

2. Disability Scenarios The student applied after July 1, 2002, and the conditional period is over. (a) The student has been granted the permanent and total disability discharge by the Dept. of Education after the 3-year conditional period. (b) The student has been denied the permanent and total disability discharge by the Dept. of Education after the 3-year conditional period. On NSLDS, if loans are in “DS,” then borrower is not eligible for loans because the borrower defaulted before filing for disability.

3. For Students Requesting New Loans When a Previous Discharge Exists Loans Discharged Prior to July 2, 2002. Obtain certification from a physician that borrower is “able to engage in substantial, gainful activity.” Borrower must acknowledge in writing that the new loan cannot be canceled on the basis of any condition present when the loan is made, unless that condition substantially deteriorates.

4. Borrower filed for disability on or after July 2, 2002 and is in three year “Conditional” Status NSLDS will indicate borrower is in conditional status. For credit bureau reporting, there is no status the guarantor can report indicating this borrower has filed for a disability Once ED accepts the disability and puts it into Conditional Status, ED reports this account to the credit bureau. Dept. of Education now holds the loans and no collection activity occurs.

5. 3-Year Conditional Period Borrower’s annual earnings from employment cannot exceed 100% of the poverty line for a family of two. (For 2006, $13,200 for family of two within the 48 contiguous states. ($16,500 Alaska and $15,180 for Hawaii) Borrower should not receive a new loan under Perkins, FFEL or Direct, except for a consolidation loan which does not include those in the conditional discharge status. If borrower receives new loan, borrower must reaffirm the debt.

6. 3-Year Conditional Period Borrower CAN receive loans during this period; however, Requires certification from physician that borrower is able to engage in “substantial gainful activity” Borrower must certify that neither the previous “conditionally” discharged loan(s) nor the new loan can be discharged in the future on the basis of any injury or illness present when the borrower applied for the disability or at the time the new loan is made, unless the condition substantially deteriorates so that borrower is again disabled. Borrower must sign statement acknowledging the conditionally discharged loan(s) will be removed from that status. Borrower must sign statement that Dept. of Education will remove the conditionally discharged loan from the conditional status.

7. Example of Student’s Certification I, _____________ certify that neither the previous “conditionally” discharged loan nor the new loan can be discharged in the future on the basis of any injury or illness present when I applied for the Total & Permanent Disability discharge or at the time the new loan is made, unless my condition substantially deteriorates so that I am again totally and permanently disabled. My signature below signifies that I understand the conditionally discharged loans will be removed from this status and my debt is reaffirmed. Further, I understand that the Dept. of Education will remove the conditionally discharged loan(s) from the conditional status. _____________________________ ______________ Signature Date

8. Conditional Period is Over—Discharge NOT Approved NSLDS will indicate “Reaffirm Discharge” and outstanding balance will appear in Aggregate Loan Information. These amounts must be included in awarding further aid.

9. Questions on Disability Discharges? Call Carolyn Holder at 505-761-2360 or Beth Leeway at 505-761-2366

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