Total

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 LoansWhen 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

• Borrowers 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 Students 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 OverDischarge 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