Total and Permanent Disability
Total and permanent disability is defined as the condition of an individual who is unable to work or earn money due to an injury or illness that is expected to continue indefinitely or result in death. A borrower may qualify for a total and permanent disability discharge if:
- a doctor of medicine or osteopathy, legally authorized to practice in a state, certifies that the borrower is totally and permanently disabled, or
- the U.S. Department of Veterans Affairs (VA) has determined that the borrower is unemployable due to a service-connected disability, or
- the Social Security Administration (SSA) is providing Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits and states that the borrower’s next scheduled disability review will be within 5 to 7 years from the date of the most recent SSA disability determination.
A borrower is not considered totally and permanently disabled on the basis of a condition that existed at the time the loan was made, unless the condition has substantially deteriorated to the point of total and permanent disability since the loan was made. In this situation, the borrower should ensure that the physician clearly notes that the condition became totally and permanently disabling after the date on which the loan was made.
Disability Discharge Process
If a borrower notifies the lender/loan holder that he or she is totally and permanently disabled, the holder must direct the borrower to notify the U.S. Department of Education (ED) of the borrower’s intent to apply for a discharge, and must provide information to the borrower regarding how to contact ED through the Nelnet Total and Permanent Disability Servicer. Borrowers should be directed to the Total and Permanent Disability discharge website at disabilitydischarge.com for general information about the process. If the loan holder receives an application from the borrower, the application must be forwarded to the Nelnet servicer. The contact information appears on the Discharge Application for Total and Permanent Disability. Nelnet will communicate with the borrower concerning the borrower’s discharge request.
ED will provide the borrower with the discharge application and will notify all of the borrower’s loan holders to suspend collection activity for up to 120 days. This 120-day period gives the borrower time to complete and submit the application and obtain any supporting documentation. Borrowers with more than one loan holder will be required to submit only one total and permanent disability application to ED.
When the completed application is received by ED, the loan holder(s) are instructed to suspend collection activity indefinitely while the application is being reviewed to determine whether the borrower qualifies. If it is determined that the borrower is not eligible for a total and permanent disability discharge, the borrower and loan holder(s) will be notified by ED and the loan holders will be instructed to resume collection activity on the loans.
If the borrower is determined eligible for the discharge, ED will notify the borrower and loan holders that the application has been approved.
- If the borrower qualifies for discharge based on a physician’s certification or acceptable documentation from the SSA, ED’s notification to loan holders will provide the date of the physician’s certification or the date the SSA documentation was received, and will direct the loan holders to assign the borrower’s loans to ED for discharge and a 3 year post-discharge monitoring period.
- If the borrower qualifies for discharge based on acceptable documentation from the VA showing that the borrower has been determined to be unemployable due to a service-connected disability, ED’s notification to loan holders will provide the effective date of the VA determination and will instruct the loan holders to discharge the borrower’s loans. There is no 3 year post-discharge monitoring period for loans discharged based on VA documentation.
TPD Lender Notification File
ED notification of borrower total and permanent disability status occurs through the use of a "TPD Lender Notification File" sent by the Nelnet Total and Permanent Disability Servicer. FFELP lenders/servicers receive the notification file in a comma separated values file format (*.csv) via e-mail to a designated contact. Each lender designates its contact through a National Student Loan Data System (NSLDS) contact type.
If ED makes the initial determination that the borrower is totally and permanently disabled, ED notifies the borrower that the loan is conditionally discharged for a period of up to 3 years after the date ED grants the discharge. ED’s notification specifies that all or part of the 3-year period may predate their initial determination, and identifies the following conditions that apply during the 3-year conditional discharge period:
- The borrower is not required to make any payments on the loan.
- The borrower is not considered delinquent or in default of the loan, unless the borrower was delinquent or in default at the time the conditional discharge was granted.
- The borrower must promptly notify ED of any changes in address or phone number.
- The borrower must notify ED if his or her annual earnings from employment exceed 100% of the poverty line for a family of two.
- The borrower must provide ED, upon request, with additional documentation of his or her annual earnings from employment.
- The borrower must not receive a new loan under the Perkins, FFELP, or Direct Loan Programs, except for a FFELP or Direct Loan Consolidation loan that does not include any loans that are in a conditional discharge status.
ED also notifies the borrower that, if at any time during the 3-year conditional period the borrower does not continue to meet the eligibility requirements for a total and permanent disability discharge, ED will resume collection activity on the loan.
Timely Filing Deadline
A lender must file a disability claim within 60 days of receiving notice from ED that the borrower's discharge application has been approved. The process for filing a claim, as well as information regarding required documentation, can be found in the Common Manual. If a disability claim is not filed by the 60th day, the guarantor will still purchase the claim—unless prior servicing violations were not cured appropriately. However, the claim will be subject to an interest penalty, and the lender will be required to repay all interest benefits and special allowance payments for amounts received or otherwise payable after the expiration of the 60-day deadline.
Payments Received after Disability Determination
Loan holders must return to the sender any payments on the discharged loans that were received on or after the date of the physician's certification, the date ED received the SSA determination or the effective date of the VA determination, dependent upon the type of discharge.