Student Loan Disability Discharge
by: Iowa Legal Aid
How a Disability Discharge Can Help
College education is expensive. The average college graduate has $19,000 in student loan debt. This can be hard to repay. It is especially hard to repay for students who become disabled and can't work. Fortunately, you might have options if you are in this situation. One option for people with federal student loans is a "disability discharge." If you are totally and permanently disabled, you might be able to discharge your federal student loans. A discharge will get rid of the federal student loan debt. If your loans are discharged, you will not have to pay them back. If you think this might apply to you, here are two questions to ask to see if you qualify:
1. Am I totally and permanently disabled?
You must be totally disabled to get a disability discharge. You also must be permanently disabled. This is defined as a "condition that keeps you from working or earning money because of an injury or illness that is expected to continue indefinitely or results in death." Your doctor must certify that this is true. Only MD's or DO's can make this certification. A physician's assistant or nurse practitioner cannot.
Receiving Social Security Disability or Supplemental Security Income does not automatically mean you will receive a disability discharge of your loans. The Department of Education uses its own definition.
2. What is my date of disability?
You are only eligible for a disability discharge if you became disabled after you took out your loan or if your disability worsened after you took out your loan. Here is an example of a student who is eligible for a disability discharge:
Student A took out loans for the 2005-2006 school year. He was not disabled at the time He became totally and permanently disabled in September of 2006.
Here is an example of a person who is not be eligible for a disability discharge:
Student B became totally and permanently disabled in September of 2005. She then took out student loans for the 2005-2006 school year. She left school in May of 2006.
How Apply for a Disability Discharge
If you think you are eligible for a disability discharge after reading these questions, here is what you can do next: First, get a copy of the Loan Discharge request. You can get it online at www.dlssonline.com, (Look in the "forms" section), by calling 1-800-848-0979., or by writing to Direct Loan Servicing Center: Borrower Services Department, P.O. Box 5609 Greenville, TX 75403-5609.
Second, fill out the form with your doctor. You will fill out sections 1 and 2and your doctor will fill out section 3.
Next, the request needs to be signed by your doctor. Your doctor must certify the date you became disabled. Your doctor must also describe your condition. Filling out the forms completely and accurately will speed up the process.
Finally, send the completed form to your lender. You must send the original to your lender. If you have several lenders, be sure you get enough forms to send them. Keep copies for yourself.
What Happens After You Apply
If you meet the criteria for a disability discharge, you will first receive a "conditional discharge." This can be for up to a 3-year period. During this time, you will not have to make payments. You will still be responsible for the loan. During the conditional period, the Education Department will evaluate your application for discharge. You will be asked to verify your income and employment.
After the conditional period ends, the Department of Education will decide if you are eligible for a final discharge. If you are, the loan will be discharged. You will not be responsible for paying it back. If you are not eligible, your request will be denied. You will have to continue repaying your loan.
Other Options If Your Discharge Request Is Denied
Even if you don't qualify for a disability discharge, you might still be having trouble paying your loans. Sometimes, partial disability or other circumstances can make you unable to work. If you don't make your monthly loan payments, the loan will go into "default."
If you are in danger of being in default, there are things you can do. You can ask to put your loan in forbearance or deferment. Both forbearance and deferment will hold off monthly payments of your student loans in different ways. Even if you are not totally and permanently disabled, you can get deferment and forbearance for "economic hardship." You can get deferment and forbearance for other reasons too. If you have more questions about deferment and forbearance, contact Iowa Legal Aid or your lender.
Disability effects many parts of your life. If you think you are eligible for a disability discharge of your student loans, you should apply as soon as possible. If you have questions about eligibility, you can call Legal Aid for further help.
|
