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Student Loan Law: 12.2.1 Introduction

A borrower’s total and permanent disability (TPD) is grounds for a discharge of federal student loans.4 Borrowers are considered to have a “total and permanent disability” if they are unable to engage in any substantial gainful activity (which relates to earning income) by reason of any medically determinable physical or mental impairment that can be expected to result in death, expected to last for a continuous period of sixty months, or has lasted for a continuous period of sixty months.5 There are th

Student Loan Law: 12.2.3 Eligible Loans

Borrowers with FFEL Program loans, Direct Loans, Perkins Loans, and HEAL loans are eligible for a total and permanent disability (TPD) discharge.38 This includes consolidation loans. Parents with PLUS loans may apply for discharges based on their own disabilities, but not for those of their children. For a PLUS loan, the disability of only one of two obligated parents does not discharge the debt.39

Student Loan Law: 12.2.4 Definition of Total and Permanent Disability (TPD)

For the purposes of discharge, borrowers are considered to have a total and permanent disability (TPD) if they are 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, can be expected to last for a continuous period of sixty months, or has lasted for a continuous period of sixty months.48 Borrowers are also considered to have a TPD if they have been determined by the Secretary of Veterans Affairs to be unemployable due to a service-con

Student Loan Law: 12.2.5 When Work Is Allowed

The question of whether a “disabled” borrower can work and, if so, when, may be confusing. The Department has stated that it does not wish to discourage disabled individuals from attempting employment. Previously, the Department had interpreted the regulations to require that the borrower not be working and earning money at the time the doctor signed the discharge application form.

Student Loan Law: 12.2.6.1 Generally

Borrowers may apply for a total and permanent disability (TPD) discharge using the current application form or the application wizard—both of which are available on the Federal Student Aid’s TPD Discharge website.57 Borrowers may also email or call to request that a TPD discharge application be sent to them by mail.58

Student Loan Law: 12.2.6.2 Applying Based on Medical Professional Certification

Effective July 1, 2023, borrowers that apply for a TPD discharge may have their disability certified by (1) a physician, (2) a nurse practitioner or physician assistant licensed by a state, or (3) a certified psychologist at the independent practice level that is licensed to practice in the United States.85 Borrowers applying based on certification from a qualified medical professional must submit their TPD application “within 90 days of the date the physician, nurse practitioner, physician assistant, or psychologist certifies the application.”

Student Loan Law: 12.2.6.3 Applying Based on SSA Determination

Previously, only borrowers eligible for TPD based on an SSA disability determination were those in the SSA’s Medical Improvement Not Expected (MINE) category. These are borrowers with their next scheduled disability review within five to seven years from the date of their most recent SSA disability determination.94 The TPD rules finalized on November 1, 2022 expand eligibility significantly. Effective July 1, 2023, the following disability categories are eligible for a TPD discharge:

Student Loan Law: 12.2.7 Effect of Discharge

In all cases, the Department will grant full discharges after approving applications. However, only borrowers approved based on a VA disability determination are finished after an application is granted. Effective July 1, 2023, borrowers approved for a TPD discharge based on an SSA disability determination or a medical professional’s certification face a three-year reinstatement period, during which time their discharged loans can be reinstated if they receive new federal student loans or a TEACH Grant.

Student Loan Law: 12.2.8.1 Generally

Effective July 1, 2023, borrowers who are approved for a TPD discharge based on a medical professional’s certification or an SSA determination will no longer face the three-year post-discharge income monitoring period. However, these borrowers are still subject to a three-year reinstatement period for obtaining new federal student loans or TEACH Grants. Borrowers whose loans were discharged based on the VA’s disability determination are not subject to a reinstatement period.

Student Loan Law: 12.2.8.2 Bar on New Student Loans During Reinstatement Period

Even though the three-year income monitoring period has been indefinitely suspended, and was eliminated as of July 1, 2023, borrowers are nevertheless still subject to the three-year reinstatement period on receiving additional federal student loans. During the first three years after receiving a TPD discharge, borrowers may not incur new federal student loans.

Student Loan Law: 12.2.8.3 Reinstatement of Obligation to Pay Discharged Loans

Effective July 1, 2023, borrowers who apply for a TPD discharge based on a medical professional’s certification or an SSA disability determination will only face reinstatement if they obtain a new federal student loan or a new TEACH Grant within three years after the date the discharge is granted.137 The bar on obtaining new federal student loans does not apply to Direct Consolidation Loans that encompass loans that were not discharged.138 If the Department reinstates a borrower’s obligation to

Student Loan Law: 12.2.9 Challenging Denials

If the Department denies an application for discharge, it must send the borrower—and, if applicable, the borrower’s representative—a notice that the discharge application has been denied, and that the loan is due and payable and will return to the status that would have existed if the discharge application had not been received.142 The denial letter must state the date that the borrower must begin making payments.143

Student Loan Law: 12.3 Discharge Based on Death

The borrower’s death is a defense to collection actions on Direct Loans, FFEL Program loans, Supplemental Loans for Students (SLS), and Perkins Loans.151 The death of both parents (assuming both parents are obligated), or the death of the student, discharges PLUS loans.152 If two parents are obligated on a PLUS loan, the death of only one of the two parents does not discharge the loan.153

Home Foreclosures: 9.4.6.1 General

In response to long-standing problems with mortgage servicing and claim documentation in chapter 13 cases, new bankruptcy rules and official forms went into effect on December 1, 2011. Bankruptcy Rule 3001(c)(2)(C) requires disclosure of prepetition default fees and arrearage amounts on the initial proof of claim filed by the mortgage creditor. Bankruptcy Rule 3002.1 compels disclosure of mortgage payment changes and postpetition fees and expenses.

Fair Credit Reporting: 12.1.3.9 Discovery and Consumer Reports

In the course of a deposition, practitioners may wish to lay appropriate evidentiary foundations for authentication of documents and to establish that documents such as consumer reports are “business records” for purposes of overcoming a hearsay objection. Authentication can also be accomplished through requests for admissions. Failure to do so may result in exclusion of such evidence at trial.188

Fair Credit Reporting: 12.1.3.10 Subpoenas

Civil Rule 45 is complex and merits a careful review and understanding. Practitioners suggest a careful analysis of its text as a factor in successful FCRA discovery litigation. The Rule was amended, effective December 2013.

Fair Credit Reporting: 12.1.3.12 Discovery of Class List

Once a class has been certified, “[i]t is defendant’s responsibility to identify class members and produce a complete and accurate class list.”204 In a case alleging violations of section 1681b(b)(3) relating to employment background reports, the fact that defendant did not maintain a uniform, central information filing system was rejected as a basis for finding production unduly burdensome.205

Fair Credit Reporting: 12.1.4.1 Discovery of Plaintiff in Individual Litigation

When the complaint includes a claim for emotional distress, discovery directed at other causes of stress in plaintiff’s life at the relevant time sometimes may be permitted.206 Defendant may seek years of medical records, including psychiatric and even gynecological records, resulting in a loss of privacy likely to chill emotional distress claims.207 Such requests raise several issues:

Fair Credit Reporting: 12.1.4.2 Discovery Directed at Class Members

Defendants’ discovery directed at class members is rarely permitted.224 In one case, for example, Experian’s proposed interrogatories (“questionnaires”) to 38,000 class members were rejected as unduly burdensome, likely to reduce the class size, and likely to require input of an attorney; in addition, Experian failed to demonstrate that the information was not readily obtainable from other sources.225

Fair Credit Reporting: 12.1.5 Record Retention

The Fair Credit Reporting Act has no specific record retention requirement and imposes no obligation that a CRA, furnisher, or user keep information for any length of time. CRAs also tend not to retain important documents. For example, practitioners report that the “Big Three” nationwide CRAs do not retain consumer dispute verification forms or records of the automated dispute verification forms.

Fair Credit Reporting: 12.1.6 Expert Testimony

As in any federal case, expert testimony to assist the trier of fact to understand other evidence or determine a fact in issue is admissible only if it passes the threshold or “gatekeeping” test established by the Supreme Court and codified in Rule 702 of the Federal Rules of Evidence. In Daubert v.