Discharging Student Loans Due To Disability

1172EN ? Rev. 04/2014

Discharging Federal Student Loans Due To Disability

Should I read this publication?

This publication has general information about discharging some federal student loans due to disability. If you have a specific problem, get advice from a lawyer. If you are low-income, check the last section in this publication for how to contact a lawyer.

Use this publication if your loans are:

? FFEL

? Direct

? Perkins

? TEACH grants

? Plus (disability must be the parent's, not the student's)

Do not use this publication for private student loans. See a lawyer for advice about your situation. Some private lenders may offer programs like the one described here.

? Can be expected to last for a continuous period of 60 months (five years) OR

? Has lasted continuously for at least that long OR

? Can be expected to result in death

I am a disabled veteran. Am I eligible for a discharge? If you get VA benefits for a serviceconnected disability, you will qualify for discharge if you can get VA documentation that

? You have a service-connected disability, or service-connected disabilities, that are 100% disabling

OR

? You are totally disabled based on an individual unemployability determination

I took out one of the student loans listed above. I have a disability. Can I get a discharge of my student loan?

Maybe, if you meet the Department of Education's definition of disability:

You will qualify if you are unable to engage in any substantial gainful activity due to a physical or mental impairment that

If you have VA documentation, you do not need to get any other documentation from a doctor.

How do I apply for a discharge?

You must fill out a Discharge Application. A blank copy of the form is included with this publication. You may now also apply online at tration.

You fill out sections 1 and 3. Your doctor must fill out section 4.

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You will sign and date at the bottom of section 3. The doctor will sign at the bottom of page 2, print his/her name, and fill in his/her medical license number.

The most important part of the application is your doctor's statement. The information your doctor provides must fully explain:

? your condition AND

? why your condition leaves you unable to work

Examples:

? Your doctor writes that you are unable to stand to work at all and you cannot sit for extended periods either.

? Your doctor writes that your mental disability prevents you from being able to show up regularly and routinely for work.

You must turn your application in within 90 days of your doctor signing off on it.

You may also be able to prove your disability if you get SSDI or SSI benefits. You must give the Department of Education a copy of a notice of award of these benefits that states your next scheduled disability review will be within five to seven years from the date of your most recent SSA disability determination. If you can provide this documentation, you do not need to get any documentation from a doctor.

Where do I send the application?

Send it to the U.S. Department of Education:

U.S. Dept. of Education TPD Servicing P.O. Box 87130 Lincoln NE 68501-7130

If you have questions or need help filling out the application, contact Nelnet. Nelnet is the Department of Education's representative regarding your discharge request. You can reach them at:

1-888-303-7818

disabilityinformation@



Mail your application return receipt requested.

What happens next?

The loan holder or Nelnet might contact your doctor for more information. You should let your doctor know about this possibility beforehand. This packet has forms you can give your doctor that explain the process.

If the Department determines that you are eligible for a discharge, it will notify you and your loan holder that it has approved your application.

My application was denied. Now what?

The Department will go back to collection activity. Your loan will go back to its former status.

If the Department denies your application, look over your loan discharge application.

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Make sure you fully filled out the application and put all the needed information in your application. You should submit a revised and completed application for the Department's review if you find that:

? you did not fully fill out the application OR

? you left out important information OR

? you have more medical proof of your condition OR

? your situation has changed

If the Department still denies your application after you resubmit it, or if you submitted a fully supported and complete application, you can seek judicial review to challenge the Department's decision. Contact a lawyer to find out if this makes sense in your situation.

The Department determined that I am disabled. Do I get the discharge right away?

Yes. BUT this may not be the end of the issue.

The Department will notify your loan holder in writing:

? the date of your doctor's certification, or the date the Department received it

? that the loan holder must assign your loans to the Department for discharge AND a three-year monitoring period

If you made any loan payments on the discharged loans after the date of your doctor's certification or after the Department got your SSA documentation, the loan holder must refund your payment.

The monitoring period does not apply to veterans who get a discharge based on a determination that you are unemployable due to a service-connected disability.

The Department may send you a Form 1099-C Cancellation of Debt, saying that the student loan debt was cancelled. If you get this form, talk to an income tax professional to determine if you owe any tax.

Can the Department take back or cancel the discharge?

During the monitoring period, the Department will cancel the discharge and start collection activity back up on your account at any time within the first three years after it granted you the discharge, if:

? You work, and you earn more than 100% of the poverty limit for a family of two (in 2013, $15,510) OR

? You get a new TEACH grant OR

? You get a new federal student loan OR

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? You do not return any of the loan money that you got pre-discharge within 120 days of the date you got the money OR

? SSA sends you a notice that you are no longer totally and permanently disabled, or that your disability review will no longer be the fiveyear or seven-year review period indicated in your most recent SSA notice of award for SSDI or SSI.

If the Department decides to cancel the discharge based on any of the above, it must first send you a notice telling you it plans to do so. The notice must state:

? The reasons the Department is canceling the discharge and reinstating your loan AND

? How to contact the Department if you believe they made a mistake in deciding to reinstate your loan AND

? the date your first payment on the reinstatement of the loan is due

What if my spouse and I consolidate our loans?

When you consolidate your loans - either on your own or with a spouse - you give up some rights with respect to the loans. Get legal advice before consolidating. You need to know how the consolidation will affect your rights in your situation. You can discharge consolidation loans only if you meet the conditions for discharge for each underlying loan.

The Department may grant a loan discharge for joint consolidation loans (you and your spouse consolidate your student loans together into one loan) if both you and your spouse qualify for a total and permanent disability discharge. If only one of you

qualifies, the Department may grant a partial discharge.

Even if the disabled borrower's portion of the consolidation loan is discharged, both you and your spouse remain jointly and severally liable for the balance of the consolidation loan. If the non-disabled borrower defaults on the consolidation loan, the lender can go after both spouses to collect payment on the loan.

I do not qualify for a student loan discharge. I am still unable to repay my loans. What can I do?

Visit for more general information about what to do when you cannot afford to repay your loans, such as:

? other loan discharges (including bankruptcy)

? postponing repayment

? consolidating your loans so you can try to get a lower monthly payment amount

? income-based repayment plans

If you have questions about your specific situation, contact a lawyer for advice or contact CLEAR if you are low-income. (See last section for contact information.)

What if I want more information about student loans?

The National Consumer Law Center's has a lot of information.

The Federal Student Aid's website has information about applying for and

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repaying student loans. Visit them at .

More information on how to get a discharge of your loan due to disability:

How to find out your federal student loan amount:

What if I need legal help?

? Apply online with CLEAR*Online or

? Call CLEAR at 1-888-201-1014

CLEAR is Washington's toll-free, statewide intake, advice and referral service for lowincome people looking for free legal help with civil legal problems.

? Outside King County: Call 1-888-2011014 weekdays from 9:10 a.m. until 12:25 p.m. CLEAR works with a language line to provide free

1172EN ? Rev. 04/2014

interpreters as needed. If you are deaf or hard of hearing, call 1-888201-1014 using your preferred TTY or Video relay service.

? King County: Call 211 for information and referral to a legal services provider Monday through Friday from 8:00 am ? 6:00 pm. Or call (206) 461-3200, or the toll-free number1-877-211-WASH (9274). 211 works with a language line to provide free interpreters as needed. If you are deaf or hard of hearing, call 1-800-833-6384 or 711. You will get a free relay operator at no cost. They then connect you with 211. You can also get information on King County legal service providers on 211's website: win211/.

? If you are age 60 or Over: Call CLEAR*Sr. at 1-888-387-7111, regardless of your income.

This publication provides general information concerning your rights and responsibilities. It is not intended as a substitute for specific legal advice.

This information is current as April 2014.

? 2014 Northwest Justice Project -- 1-888-201-1014 (Permission for copying and distribution granted to Washington State Alliance for Equal Justice and to

individuals for non-commercial purposes only.)

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