Taking the Stress out of Debilitating Health Issues
March 8, 2011 10:17 PM   Subscribe

Student Loans Disability Discharge - The home page of StudentLoans.gov now includes a link, "Loan Discharge", leading to information on obtaining a Total and Permanent Disability (TPD) Discharge for borrowers and their physicians. The form is fairly simple. This information was nearly impossible to obtain BO (before Obama).
posted by Ardiril (26 comments total) 26 users marked this as a favorite
Here is the kicker:
Depending on the type of loan discharge program you may be eligible for, the holder of the loan may be required to refund to you some or all of the monies you paid on the loan. In addition, the loan holder may be required to delete any adverse credit record related to a default, and no tax refund offset or wage garnishment will take place to collect on the discharged loan. If the loan was in default, the discharge may erase the default status. If you have no other defaulted loans, you regain eligibility for federal student financial assistance.
posted by Ardiril at 10:30 PM on March 8, 2011

This is really useful information!
posted by Katjusa Roquette at 10:36 PM on March 8, 2011 [1 favorite]

This is awesome. I'm going to need this form when I'm like 80 years old and still trying to pay off my student loans.

But seriously, I do know someone who needs this paperwork. She's disabled and has tried to stave off her student loans for years, some company recently talked her into consolidating her loans (with extra fees piled on). I'd like to see the greedy loan company get stiffed on that one.

Oh, check it out, it briefly discusses terms for discharging your loan through bankruptcy. I recall this used to be impossible, then some guy accidentally got a discharge in his bankruptcy due to a paperwork snafu. The government fought back and tried to maintain that student loans couldn't be discharged in bankruptcy but he won. Now it looks like that door is open. The linked site says the debt can be cancelled if the court rules that repayment would be an undue hardship. Hell, you wouldn't be filing for bankruptcy if you could repay these loans without undue hardship.
posted by charlie don't surf at 12:26 AM on March 9, 2011

Snark all you want, friend. I'm shedding this anchor, and I could not be happier.
posted by Ardiril at 1:33 AM on March 9, 2011 [1 favorite]

I mean, good for them for making the information more available, but it's just as draconian as it was before:
During the 3-year post-discharge monitoring period, the borrower must promptly notify the Department if the borrower receives annual earnings from employment that exceed the poverty line amount for a family of two in his or her state, regardless of actual family size. . .
So yeah, we'll discharge your loans, but only if you earn less than $15,000 a year. And no, we're not going to increase that if you've got kids.

Thanks for nothing.
posted by valkyryn at 3:43 AM on March 9, 2011 [2 favorites]

I'd heard that Obama pass some much broader scope graduated repayment program, no?
I wouldn't know the details myself being from Georgia bitches. Umm, university is free in Georgia. I didn't mean to imply we never go to university, that's Alabama's approach to student loans. ;)
posted by jeffburdges at 4:28 AM on March 9, 2011

Wouldn't that be a sight, if student loans turned into the Mortgage Meltdown, Part Two?
posted by Forktine at 5:19 AM on March 9, 2011 [1 favorite]

Oh student loans, what middle class WONT you destroy?
posted by norabarnacl3 at 5:40 AM on March 9, 2011 [1 favorite]

Wouldn't that be a sight, if student loans turned into the Mortgage Meltdown, Part Two?

Uh huh.

Q: Why do you think they removed the ability to discharge the loans way back in 1998?
A: Because they knew this was coming.
posted by Civil_Disobedient at 5:41 AM on March 9, 2011

The linked site says the debt can be cancelled if the court rules that repayment would be an undue hardship. Hell, you wouldn't be filing for bankruptcy if you could repay these loans without undue hardship.

I wouldn't get too excited. I seem to recall reading some caselaw back during law school that courts have set pretty high thresholds for what constitutes "undue hardship."
posted by Dr. Zira at 5:53 AM on March 9, 2011 [1 favorite]

One of the reasons that we live where we live is because of my husband's job, which provides free university tuition to all of his dependents.

Because our income is low in relation to our family size, I'll have them fill out FAFSAs, and hopefully they'll get Pell Grants to pay for things like books and gas. But as long as I have any powers of coercion, they won't get a single loan. If they need more money, credit cards are bankruptable.

I suspect that as more student loan saddled parents send their kids off to school, they'll start saying similar things. It's possible to get through two years of community college without debt, especially if you work and get a full Pell. (In some states, like MI and FL, you can go to any public college for free if you are over 15, under 18, and can pass the entrance exam. This amounts to a free two years for a bright high schooler, but you won't see this advertised anywhere.)

Skating through your last two years on a paste-and-cardboard racer of Pell, credit cards, and, hopefully, scholarships, is a doable plan for those us unendowed with massive mutual funds.

I have five figures of Sallie Mae/Direct loans that are all in IBR. (I did graduate, with a bachelor's that seemed useful at the time.) My payments are $0, and even after our kids are no longer dependents, the payments will be like $20-$50 per month. After 25 years of IBR, whatever's left will be discharged.

When I calculate the value of me working instead of staying home, this is in the forefront of my mind: besides needing a car payment and child care, and losing the $2800 a year we get in the EITC, my loan payments would go up, waaay up, based on the fact that is *me* working. Even after my kids are old enough to stay home alone, the fact is that it probably will not be worth it for me to work. Staying at home, I am able to keep our expenses low (making clothes and food, having a semi reliable vehicle instead of a very reliable one, being here to heat with wood, etc.)

Taking all that away and adding in loan payments doesn't make a lot of financial sense.

Even though I want to go to grad school, and could go for free, those loans from my undergrad make me wonder if it would be worth it, or if would just be a stay at home mom with a master's degree.

I feel like not allowing student loans to be bankruptable has done the opposite of the intent, at least in my case: it has stifled economic growth, because it just makes more sense for me to stay home. The money I would spend on a nanny, restaurants, and getting my nails done once in a while, if I had a full time job, that money isn't earned by me or paid out to anyone else.

I am in a situation that is better than that of many, many people I know. I am starting to think that the student loan debt situation is going to become something of a civil rights issue for young people. If they do change the law, I'll race to the courthouse, despite my good situation.
posted by Leta at 7:41 AM on March 9, 2011 [7 favorites]

Did I miss it on one of the links, or can you point to some proof to back up the claim "This information was nearly impossible to obtain BO (before Obama)."

(ie it might have been date related news that did not mention him, but is there any proof it was pushed/put into play by Obama ?)
posted by k5.user at 8:39 AM on March 9, 2011

k5: I can only relate my own personal experience. In 2009 and after 5 years of trying, I finally got a Student Loans rep to admit, over the phone, that a discharge for total and permanent disability was possible. I asked if I could download the form from online, and she replied that Direct Loans would have to mail me one. The form I received required the (exact) same extensive detail that Social Security pretty much requires a lawyer (to extort from your doctor, and) to submit. That clause about being disabled for over 60 months is new.
posted by Ardiril at 9:16 AM on March 9, 2011

Um, what? The Chronicle of Higher Education (in conjunction with ProPublica) just did a front-page above the fold article* on how the Dept of Ed is still making it impossible for those ruled permanently disabled to discharge federal student loans.

*See this ProPublica article for more details if you can't read the Chron article.

The lede? "After an investigation by ProPublica last week found that the Department of Education’s bureaucratic program for forgiving the federal student loans of disabled borrowers has kept many disabled applicants in debt, the department said this week that it will overhaul the troubled program."

You're a little too quick to praise Pres Obama for this one, Ardiril. More like, they were embarrassed into it.

Also, it's worth noting that the ProPublic/Chron article suggests that the Dept of Ed streamline things and use the Social Security disability process (which is very streamlined and well functioning, in comparison) instead of their own, frustrating process for proving total disability.
posted by librarylis at 9:49 AM on March 9, 2011

librarylis: Did you read that article? All those studies cited were performed in 2009 and earlier. Also, your article details moves initiated by DOE to simplify and streamline the process.

And don't worry, I'm not going to praise Obama without cause. I still think we would have been better off with either Hillary or McCain over him.
posted by Ardiril at 10:09 AM on March 9, 2011

or McCain

posted by thsmchnekllsfascists at 10:18 AM on March 9, 2011

Yeah, McCain & Palin would have been better than Obama, imo.
posted by Ardiril at 10:20 AM on March 9, 2011

Yeah, McCain & Palin would have been better than Obama, imo.

How exactly? I don't mean to get fighty; I'm genuinely curious.
posted by thsmchnekllsfascists at 10:21 AM on March 9, 2011

Obama had and continues to have little to no political influence in Congress. Hell, Cindy McKinney with her loony father in the background would have done a better job.
posted by Ardiril at 10:53 AM on March 9, 2011

I don't mind working and paying back my loans. I understand the choice I made when I was very young and am working to deal with it as best I can.

What I DO mind is:

- The predatory ways loans are given out to young people that are in their teens and early twenties who often have no understanding of the long term consequences that borrowing can have.
- The ways fees are piled on if you need to apply for forbearance, miss a payment or god forbid go into default.
- The exorbitant, unregulated interest rates that make a small private loan suddenly balloon into something three to four times the original size, making a manageable original amount borrowed suddenly impossible to repay.

I could go on and on. This article explains this racket better than my own personal ranting. While none of us would never wish to be totally and permanently disabled, sometimes the weight on our backs and the growing grand canyon of debt in front of us is more crippling than these student loan sharks will ever admit. They don't care though - just so long as there is enough bloody meat in the water to feast on they don't care who sinks or who swims safely to shore.
posted by cristinacristinacristina at 11:15 AM on March 9, 2011 [1 favorite]

sometimes the weight on our backs and the growing grand canyon of debt in front of us is more crippling than these student loan sharks will ever admit

With close to 6 figures of student loan debt, that stress was one of a small handful of factors that worsened my heart disease. My disability lawyer even included that in his filing with Social Security.
posted by Ardiril at 11:19 AM on March 9, 2011

librarylis: Did you read that article? All those studies cited were performed in 2009 and earlier.

Are you talking about the articles I linked to? Yes, I read the Chron article* before linking to it on Metafilter (as it happens, I read it in print when it came out two weeks ago).

*The ProPublica is a shortened re-hash of the Chron article and I linked to it because it's free access whereas the Chron has a paywall.

Secondly, the article specifically mentions that Congress kicked things off in 2008, with a bill passed in Jan 2008 and proposed in 2007 (that is a link from the Chron to OpenCongress, which takes you directly to the applicable text of the bill). If you use the equally nifty Govtrack.us, you'll see that it was sponsored by George Miller of California and signed by George Bush (so, not Obama).

Also, I'm not sure what you mean by 'studies.' There are no studies in the articles I linked--investigations, articles, laws, court cases, etc. No studies. Yes, things really got kicked off in 2009 with a court case (also helpfully linked in the Chron article). Resulting from the 2008 law and the changes it propagated.

Finally, I think the BO Before Obama stuff in the FPP is unnecessary and inaccurate editorializing and I voted for the man. I'm glad that you posted this FPP, as I'm sure that many folks on Metafilter and beyond will find it useful. I am, however, in the business of being accurate and citing your sources, so I'll object to your last sentence and hope that folks get what they need in the sentences preceding it.
posted by librarylis at 11:40 AM on March 9, 2011

I hear you Ardiril, it does a number on you - I'm in the six figure debt department, and I was unemployed for a large portion of 2009. Even with unemployment deferment, more than half my UI went to Sallie Mae! I think I aged 10 years in that one year alone.
posted by cristinacristinacristina at 11:52 AM on March 9, 2011

oh well, librarylis, we can't please everybody
posted by Ardiril at 11:57 AM on March 9, 2011

Note also that this good information has nothing to do with private loans. If you have or had those, you can pretty much count on them hounding you even if you're on your deathbed and then hounding whoever knew you in life when you're in the grave.
posted by blucevalo at 1:12 PM on March 9, 2011 [1 favorite]

Thanks for this post, Ardiril. This is definitely relevant to my situation.
posted by jtron at 2:24 PM on March 9, 2011

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