Education Loan – Will a discharged federal student loan be re-activated if the borrower returns to school?
Question about will a discharged federal student loan be re-activated if the borrower returns to school : My husband is 100% disabled and many years ago had a federal student loan conditionally discharged because of this. He completed the final discharge paperwork a few years ago with a note from the Department of Education that included a statement that said his status would continue to be monitored and any changes may result in the loan being reactivated.
He is still unable to work but is considering taking a 3 hour college credit class at a local school. He has no intentions of applying for financial aid, but my concern is his old discharged loan may be reactivated if the Department of Education sees that he has re enrolled.
He does not have the ability to go back to work, so the thought of that loan being reactivated scares the crap out of me.
Answer about will a discharged federal student loan be re-activated if the borrower returns to school : Well, Ms. Human, I would be privileged to answer this question for you. In fact, I’d like to point out that this answer represents my 5000th Yahoo! Answers response. So congratulations to me, and here’s your answer:
The regulations that provide for TPD (Total and Permanent Disability) Discharge of Federal Family Education Loans (which I guess is what your husband had) are contained in Title 34, Chapter VI of the Code of Federal Regulations. The CFR is where you’ll find the official version of every regulation created by the agencies and executive departments of the federal government.
Looking at Title 34, Chapter VI of the CFR, you’ll find your particular answer in Part 682.402, starting at section c(2) and continuing to the end of section c.
Here’s some of the highlights:
The process begins with a notification to the lender of the borrower’s total and permanent disability. The lender must then request a discharge application, using the form created by the Department of Education. The applicant must provide a certification by a physician that the borrower meets the statutory definition for TPD.
If the Department of Education determines that the application is sufficient, the Department notifies the borrower that the loan will be placed in “conditional discharge” for a period of up to 3 years.That notification will also describe the conditions for the conditional discharge – conditions that are included in that regulations. The conditional discharge period is dated as of the day that the physician signs the certification.
Over that three year period of conditional discharge, the following eligibility requirements must be maintained:
The borrower’s annual earnings can not exceed the poverty line income for a family of two (this is regardless of how many people actually live in the household)
The borrower can not receive a new TEACH grant, or a new Title IV loan, with the exception of a loan that consolidates any prior (non-discharged) Title IV loans.
The borrower must return any loan funds for any recently disbursed loans.
During that 3 year period, the borrower must notify the Department of any changes in address or phone number, notify the Department if their income exceeds the statutory maximum, and provide the Department with any additional documentation necessary to support their TPD claim. The Department has the right (at any time) to arrange for an additional medical review of the claimant’s condition, as long as there is no charge to the borrower.
If the borrower satisfies these conditions for the entire 3 year condition period, the balance of the loan is permanently discharged. If at any time during the 3 years, the Department determines that the borrower no longer qualifies, the loan re-enters repayment, though the borrower is not charged interest that accrued from the date that they were originally granted a conditional discharge.
As you can see, there are no prohibitions on activities contained within the regulations – and specifically with regard to your question, there are no prohibitions against attending school. The statutory definition of Total and Permanent Disability is nothing more than: “The condition of an individual who is unable to work and earn money because of an injury or illness that is expected to continue indefinitely or result in death.”
The Higher Education Opportunity Act of 2008 modified the existing regulations related to TPD. There’s a little more language there about what it means to be totally and permanently disabled. According to the HEOA, the applicant must be: “unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, has lasted for a continuous period of not less than 60 months, or can be expected to last for a continuous period of not less than 60 months”
“Substantial Gainful activity” is not specifically defined in the regulations, however, the term is used to refer only to the dollar amount that an applicant can earn each month – not to activities like going to school.
As long as your husband does not apply for any Title IV loans, he should not have to worry that school attendance will violate the restrictions of his conditional discharge during the 3-year discharge period.
article here.
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