The changes will ease the burden on people who are disabled and are trying to get a total and permanent disability (TPD) discharge of student loans.
The new regulations, which went into effect July first, make it easier for people to prove they’re disabled. Instead of having to go through several doctor’s certifications, which can take months, they can just use their state disability status. If they’re already on Social Security Disability Insurance (SSDI) or Social Security income (SSI) benefits they can submit their Social Security Disability (SSA) notice of award – if it includes that their next review is in five to seven years which means they’re considered permanently disabled.
The changes affect most loan programs including the William D. Ford Federal Direct Loan (Direct Loan) Program, the Federal Family Education Loan (FEEL) Program, the Federal Perkins Loan (Perkins Loan) Program and the Teacher Education and Access to College and Higher Education (TEACH) Grant service obligations.
Also with the changes, people with disabilities will no longer have to submit discharge applications to several individual loan holders. They’ll just have to submit one to the U.S. Department of Education. That one application can liquidate all of that person’s Title IV loans and/or TEACH Grant service obligations.
These changes are allowing attorneys at Legal Services of Eastern Michigan to help more people who are disabled and can no longer work to pay their loans.
“This will help a lot of people who are already struggling,” said LSEM Attorney Lindsey Lavine. “It takes a long time and it’s very difficult to prove total disability. With the new regulations many of our clients will be able to skip that process because they already have proven disabilities and have SSDI or SSI and we’ll hopefully be able to take care of their debt.”
The only other avenue for LSEM to take in these cases is to get people on an income-based repayment. “It drops peoples’ payments to zero, but their debt still remains,” said Lavine. “Now, having proven total disability with SSDI or SSI we can actually try to erase their debt.”
An LSEM client should benefit from the new regulations soon. She has severe arthritis and can’t leave her home, so she can’t work. Lavine said, “she contacted us in February and we got her on an economic hardship deferral so she doesn’t have to pay for a year, but now with the new regulations we should be able to get her loan discharged.”