Student Loans

[JR Gabbard]

Hi everyone,

My student loans were just discharged (for total and permanent disability), so I'd like to report on how the process works.  There are several steps.

First is the application, which you get from your lender.  Your doctor must state that you are currently unable to work due to your medical condition (careful, because the application seems to say something different).  You submit the application, and the Dept. of Education makes a separate determination whether your condition is permanent.  HIV, due to its nature, is permanent.

If DOE decides that your condition qualifies, they grant a conditional discharge.  Then there is a 3-year period when you cannot earn more than $13,000/yr from work (earned income).  That is the condition.

If at the end of the 3-year period you have met the condition, they grant a final discharge, and return any payments you made after your date of disability onset (the day your doctor says you became too sick to work).

During the 3-year period, the status of your loans remains the same as it was the day you became "disabled,"  meaning if your loans were current your credit report reflects that, and if you were in default, the report says "in default" until you get the final discharge.

I can also report that, when I got the final discharge letter, I lost a considerable amount of stress (that I had forgotten I was experiencing).  That felt good.

Hope someone finds this helpful.

JR

[PozitivelyColorado]

What a great posting!  I'm under constant stress because of student loans that I won't pay as long as I'm on SSDI.  Thanks for posting it.

[Robert]

This really is a good posting.  IT's terrific news and I think will help a lot of people.  I certainly didn't know about this and will serve as a friendly reminder for others. 

Thanks for the info.

robert

[LordBerners]

Thank you so much for this posting.  These loans have been worrying me endlessly - I owe over 150,000 myself.  Nice to know there may be a way out.

[GSOgymrat]

Good to hear there is a way to get that situation resolved.

[jkinatl2]

I am glad that worked out for you! It really does take a compassionate doctor and some legwork. I have been trying for a year to get mine discharged. I need to ramp up the effort, I think.

Thanks for the inspiring news!

[sharkdiver]

This is wonderful information, thank you.

      I know this subject, as well as finding grants, has come up before and we haven't been able to provide adequate information (for here in the U.S). I appreciate the stress you went through and am thankful it turned out in your favor. 
      I think it would be great if AIDSmed  was able to keep this and similar info easily available to those who need it.

again thank you!

Sharkie

[JR Gabbard]

Hey everyone,

Thanks for the kind words!  And I'm glad people find the information useful.

PozitivelyColorado:  DOE says that they will dock SSDI benefits (but not SSI, I believe) if you default on your loans.  I got a letter to that effect, which freaked me out.  BUT, I've never actually seen disability benefits docked for anything other than child support obligations.  DOE definitely intercepts income tax returns (and stimulus payments) if you are in default.  If you can get a discharge, you really should.

Robert:  Sweet as ever, you.  How have you been??

LordBerners:  You have me beat on the $$, but not by much (~$140,000)

GSOgymrat:  WOOF.  That's all.  WOOF.

jkinatl2:  Hang in there.  It's worth the trouble (and stress, and legwork, and .....)

sharkdiver:  HIV-specific legal information is scarce.  That's partly what's behind AIDSLawProject!!!

And finally, the part I forgot when I posted the thread:  When your loans are discharged, the amount of the loans is considered taxable earned income for the year that you got the discharge (2008 in my case).  You must pay taxes on it UNLESS you are insolvent (your debts exceed your assets).  This can be problematic if you have equity in a house, or own stock, and you would do well to consult a tax attorney if you are in that position.  (I'm not)

[next2u]

dude, great fucking post. beautiful and stuff. a 3rd party took over my loan, do you think i could still get it discharged?

[JR Gabbard]

dude, great fucking post. beautiful and stuff. a 3rd party took over my loan, do you think i could still get it discharged?

Good question.  It depends on a couple different factors.

There is a pre-existing condition provision.  Your date of disability onset must be after the date of the loan, or the date of any subsequent re-financing/consolidation of the loan. 

If someone bought the loan, and you became disabled after the date you took out the loan, you should be OK.  Get the application from whoever holds the loan.

If you consolidated or re-financed, make sure your doctor puts down an onset date later than your 2d loan date and you should be OK.

This assumes you are eligible for SSDI/SSI.  The disability standard is the same.

[ArisGreekSquared]

Eeek...$13K/year? Seriously? How do they expect someone to live on $13K a year?

[jkinatl2]

Sadly, I was on SSDI when I took out my loan. I was in much better health then than now, so perhaps a doctor's report of my recent PCP and hospitalization will help. Regardless, I am going to send through a discharge form just to see.

Bankruptcy will not discharge a student loan, will it? If so, that might be my only option. Can they take my SSDI/SSI? I do not get enough from SSDI to remain at the "poverty level" so this is supplemented by SSI. Can either/both of these be touched? I'm screwed six ways from Sunday if this is the case.

It's always something.

[JR Gabbard]

Sadly, I was on SSDI when I took out my loan. I was in much better health then than now, so perhaps a doctor's report of my recent PCP and hospitalization will help. Regardless, I am going to send through a discharge form just to see.

Bankruptcy will not discharge a student loan, will it? If so, that might be my only option. Can they take my SSDI/SSI? I do not get enough from SSDI to remain at the "poverty level" so this is supplemented by SSI. Can either/both of these be touched? I'm screwed six ways from Sunday if this is the case.

It's always something.

There is an exception to the pre-existing condition provision if your condition deteriorated after you took out the loan, so there is still hope for your discharge.  The date you were diagnosed with PCP is a good date to allege as your new onset date, because it's easy to prove specifically, with med records.  I was in exactly the same position (all the way down to the PCP).

Bankruptcy discharge is available, but only on proof of extreme hardship, which is extremely hard to prove, expecially to a Bankruptcy judge who will have a very different idea of extreme. 

DOE says they will take your SSDI.  I think SSI is safe (from everything except child support orders), because of the public policy behind the benefit (to meet basic needs).  I've never heard of them actually following through on the threat against SSDI benefits, though. 

[JR Gabbard]

Eeek...$13K/year? Seriously? How do they expect someone to live on $13K a year?

Not exactly.

You should be receiving some kind of disability benefit, or else someone really screwed up your case.

Some SSDI benefits amount to more than the $13K on their own.

The $13K limit only applies to money you earn from work. 

[pozhealthy]

I don't know how to even begin to live on 13k, what do you do for health care and prescriptions. I am not disabled (yet) and can still work and make a decent living but not enough to pay for everything. My HIV med copays are $100 each! and this does not include all the other meds I am on.
And for those of you who do not know, bankruptcy is NOT allowed for student loans. Maybe we should all get together and get congress to pass a law that would restore this protection.
Please contact me if you are in this situation.
Thanks.