Student Loan Debt – Disability Discharges

Course Description

Student Loan debt has reached a crisis point in this country. This consumer debt is more than $1.2 Trillion.The amount of this debt exceeds other consumer debts, including credit card and automobile loans. Only mortgage loans exceed the value of Student Loan debt for consumers. Student Loan debt is non-dischargeable in Bankruptcy, where other consumer debt is dischargeable.

In addition, collectors of Federal Student Loans are given special and extraordinary collection devices including offsets against a borrower’s social security payments, garnishment and other collection powers.

The default and delinquency rates on these student loans are significantly higher than other unsecured obligations. Less than 50% of existing educational loans are being paid according to the original terms; and more than 40% are delinquent or in default. Defaulted loans pose substantial problems for borrowers, and keep a disabled person from obtaining a Total and Permanent Disability Discharge.

This course identifies the types of Student Loan debt and the options available to student loan borrowers based on current federal law including administrative and legal considerations. Student Loan Debt – Disability Discharges details the application process for obtaining a Total and Permanent Disability Discharge of a Federal Student Loan.

Additionally, the course sets forth the specific requirements and guidelines associated with obtaining a discharge, and the effects of receiving a Total and Permanent Disability Discharge.

Interactive CLE Credits –
Florida:  2.0 hrs
New York: 2.0 hours
Special Price: $99 – Instant Online Delivery Enroll Now

Course Outline

By Nancy L. Cavey, Esq. and Constance d’Angelis, Esq.

Introduction                                                                                                                2 minutes

I Student Loan Debt

1. A. Value of Debt
2. B. Offsets to Social Security recipients
3. C. How Offsets are calculated

II Student Loan Law

1. A. Types of Loan/Debt
   1. 1. Federal
   2. 2. Private

1. B. Federal Loan Repayment Phase
   1. 1. Grace Period
   2. 2. Deferment
   3. 3. Forbearance
   4. 4. Repayment Programs
   5. 5. Delinquency
   6. 6. Default

1. C. Fundamental and Required Legal Queries
2. D. Necessary Client Data and Information
3. E. Effects of Payment Default
   1. 1. Penalties apply at 270 days delinquent
   2. 2. Collection activity
   3. 3. Administrative Wage Garnishment
      1. a. Hearing Rights
      2. b. Must Cure Default
      3. c. How to cure default (Rehabilitation payments)
   4. 4. Repayment Programs (ISR, ICR, IBR, PAYE)
4. F. Collection of Student Loan Debt
   1. 1. Private Loans: Securitization of debt; FDCPA violations
   2. 2. Federal Loans: Extraordinary Collection Powers, Default and Statute of Limitations
   3. 3. Offsets
   4. 4. Garnishment

42 minutes

III Administrative Discharges

1. A. Closed School, Identity Theft, False Loan Certification
2. B. Total & Permanent Disability

IV Federal Loan Types

1. A. 11 types – Stafford, direct subsidized or unsubsidized
   B. Direct, Perkins, FFEL, Parent Plus, Medical HEAL

V. Loans eligible for Disability Discharge: William D. Ford Federal Direct Loan (Direct Loan) Program loans, Federal Family Education Loan (FFEL) Program loans, Federal Perkins Loan (Perkins Loan) Program loans, and Teacher Education Assistance for College and Higher Education (TEACH) Grant Program

VI. Eligibility criteria for “Disability” discharge

1. A. Gainful Activity
2. B. Impairment
   1. 1. Death
   2. 2. 60 month continuous
   3. 3. Unemployable – VA award SSI

VII Terms of Total and Permanent Discharge

1. A. Loan balance discharged
2. B. Refund during application pending
3. C. Credit reporting
4. D. Monitoring
   1. 1. Three (3) year period
   2. 2. Annual submission of documentation
   3. 3. Income below federal poverty level
   4. 4. No new Federal student loans
5. E. Veteran’s Award – Veteran’s Administration (VA)

11 minutes

VIII Applying for Total and Permanent Disability

1. A. Application requires
   1. 1. Physician Certification or
   2. 2. Social Security (SS) or VA award
2. B. Notice to all servicers & debt collectors
3. C. Failure to stop collection actions (FDCPA & UDAP violations)
4. D. Nelnet –
   1. 1. Send certified mail and confirm receipt
   2. 2. Approve or deny
   3. 3. Message to servicers and collection agencies
   4. 4. Sent to DOE (Dept of Education) for discharge
5. E. Department of Education (DOE)
   1. 1. Monitors for 3 years
   2. 2. Has right to reinstate loan
      1. a. Failure to submit annual income documentation
      2. b. Income in excess of poverty for family of 2
      3. c. Disability review by SSA
      4. d. SSA cessation notice
      5. e. New student loan or teaching grant
   3. 3. Written notice of reinstatement
6. F. Annual Income Documentation
   1. 1. Social Security Statement of Earnings
   2. 2. Tax Return
   3. 3. Other documentation
7. G. Tax Implications of Disability Discharge
   1. 1. ED (DOE) may issue 1099-C
   2. 2. Earned income or assets
   3. 3. Tax consultation
   4. 4. Modify retainer agreement re: tax consult

16 minutes

IX Private Student Loans

1. A. Default
2. B. Contract Law and State Law
3. C. Loan documents control terms and discharge provisions, if available. Possible renegotiation.
4. D. FDCPA and collection violation remedies
5. E. States that limit collection
6. F. Defenses – limited

X Bankruptcy – The “Brunner” Test

XI Administrative Discharges; Resources (NCLC); Materials

 21 minutes

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2.0 Hours of CLE Credit – Video instruction with electronic copies of all seminar and supplemental materials.
Certificate: Downloadable electronic certificate for course participants.
Special Price: $99
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