Monday, January 7, 2013

New Total and Permanent Disability Discharge Rules

This rule applies to any student loan borrower in the Title IV branch of financial aid, which means Direct Loans, FFELP loans, and Perkins loans.

The first change is that starting July 2013, all borrowers will apply for Total and Permanent Disability (TPD) directly to the Department of Education, rather than to the school or the lender/guarantor.

Borrowers may also apply using certain types of disability determinations from the Social Security Administration (SSA). Borrowers wholse disability status is confirmed by SSA and who are subject to a status review in five to seven years may submit that documentation rather than undergoing the usual TPD loan discharge application under the Title IV loan programs.

There are three aspects that are not changing though. 1. Borrowers will still be subject to a three-year post discharge monitoring period. 2. And increase in income or receipt of Title IV loan funds or a Teacher Education Assistance for College and Higher Education Grant may result in the reinstatement of the previously discharged loans. 3. The Department of Education may request documentation from the borrower and the borrower has to comply.

So this should make things a little easier for the borrowers to go through the TPD, but on the other hand, they are still keeping the rules tough for those who don't deserve a TPD loan discharge.


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