Updates to Total and Permanent Disability Discharge Laws & Regulations

 

Recent Changes to Law

The following documents contain information about key updates to the total and permanent disability discharge process:

Higher Education Opportunity Act (HEOA): The amendments to the Higher Education Opportunity Act included several changes that impact the total and permanent disability discharge process. More information is available on the Higher Education Opportunity Act at www.ed.gov/HEOA.

The U.S. Department of Education has also published the following Dear Colleague Letters discussing these changes:

 

 

Recent Changes to Regulations

Regulations Effective July 1, 2010 

Final regulations that were published on October 29, 2009 (FR 55972 Vol. 74), made significant changes to the terms and conditions of total and permanent disability discharges. These changes are effective July 1, 2010. The table below summarizes the differences between the prior regulations and the new regulations.

Note: The information in the table does not apply to veterans who have been determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected disability. For these veterans, there is a separate discharge process that is described in detail in Dear Colleague Letter GEN-09-07 and in the October 29, 2009 final regulations.

Issue Prior Regulations New Regulations Effective July 1, 2010
Definition of total and permanent disability 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 condition of an individual who—

(1) Is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that—

 

i. Can be expected to result in death;

ii. Has lasted for a continuous period of not less than 60 months; or

iii. Can be expected to last for a continuous period of not less than 60 months; or

(2) Has been determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected disability.


 
Discharge is granted At the end of the three-year conditional discharge period. Upon the Department’s determination that the discharge application supports the conclusion that the borrower is totally and permanently disabled.
 
Three-year monitoring period begins A three-year conditional discharge period begins on the date the physician completes and certifies the borrower's total and permanent disability on the application (Physician's Signature Date). A three-year post-discharge monitoring period begins on the date the discharge is granted by the Department (Date of Discharge).
Treatment of disbursements made between the Physician Signature Date and the Date of Discharge (See “Conditions for remaining eligible during the three-year monitoring period.”) If a borrower received a Title IV loan or TEACH Grant prior to the Physician Signature Date and a disbursement of that loan or grant is made on or after the Physician Signature Date and before the Date of Discharge by the Department, the loan holder must suspend processing of the borrower’s loan discharge request until the borrower ensures that the full amount of the disbursement has been returned to the loan holder or to the Department, as applicable.
Conditions for remaining eligible during the three-year monitoring period A borrower qualifies for a final discharge if, during the three-year conditional discharge period, the borrower—

(1) Does not have annual earnings from employment that exceed 100 percent of the poverty guideline line for a family of two;

(2) Does not receive any new TEACH Grants or Title IV loans except for a FFEL or Direct Consolidation Loan that does not include any loans that are in conditional discharge status; and

(3) Ensures that the full amount of any Title IV loan disbursement on any loan received prior to the date the physician completed and certified the borrower’s discharge application is returned to the holder within 120 days of the disbursement date.
 		 The Secretary reinstates a borrower’s obligation to repay a discharged loan if, within three years after the date of discharge, the borrower—

(A) Has annual earnings from employment that exceed 100 percent of the poverty guideline for a family of two;

(B) Receives a new TEACH Grant or a new loan under the Perkins, FFEL, or Direct Loan programs, except for a FFEL or Direct Consolidation Loan that includes loans that were not discharged; or

(C) Fails to ensure that the full amount of any disbursement of a Title IV loan or TEACH Grant received prior to the discharge date that is made during the three-year period following the discharge date is returned to the loan holder or to the Department, as applicable, within 120 days of the disbursement date.
 

Notification of Reinstatement

If your obligation to repay a loan or complete a TEACH Grant service obligation is reinstated, the Department will notify you of the reinstatement. This notification will include:

  • The reason(s) for the reinstatement;
     
  • For loans, an explanation that the first payment due date following the reinstatement will be no later than 60 days following the notification of reinstatement; and
     
  • Information on how you may contact the Department if you have questions about the reinstatement, or if you believe that your obligation to repay a loan or complete a TEACH Grant service obligation was reinstated based on incorrect information.