Publication Date: August 16, 2010
Subject: Revised Total and Permanent Disability Discharge Application
Summary: The letter announces the approval of a revised Discharge Application: Total and Permanent Disability for use by borrowers in the William D. Ford Federal Direct Loan (Direct Loan) Program, the Federal Family Education Loan (FFEL) Program, and the Federal Perkins Loan (Perkins Loan) Program, and by recipients of grants under the Teacher Education for College and Higher Education (TEACH) Grant Program.
The Office of Management and Budget (OMB) has approved a revised Discharge Application: Total and Permanent Disability under OMB Control Number 1845-0065. The revised form will be used by Direct Loan, FFEL, and Perkins Loan program borrowers to apply for discharge of their loans based on a total and permanent disability, and by TEACH Grant recipients to apply for total and permanent disability discharges of their service obligations.
The revised Discharge Application: Total and Permanent Disability incorporates changes to the total and permanent disability discharge provisions made by the final regulations for the Direct Loan, FFEL, and Perkins Loan programs that were published on October 29, 2009 (effective July 1, 2010). The regulations for the TEACH Grant Program provide for the discharge of a TEACH Grant recipient's service obligation based on total and permanent disability in accordance with the eligibility criteria and procedures specified in the Direct Loan Program regulations.
In a June 30, 2010 electronic announcement, we reminded loan holders of the changes to the total and permanent disability discharge regulations that took effect July 1, 2010 and provided a summary of these changes. The changes in the revised discharge application included with this letter are generally limited to revisions that were necessary to reflect the amended discharge regulations. The only exceptions are a few minor wording changes in various places on the form for clarity or consistency.
Note that although the previous version of the form already included the special discharge provisions for certain veterans that are described in the June 30, 2010 electronic announcement and in Dear Colleague Letter GEN-09-07, the information related to these provisions has been reorganized and expanded on the revised form in order to more clearly distinguish the veterans discharge process from the general discharge process that applies to other borrowers. This is consistent with the amended total and permanent disability discharge regulations, which present the general discharge process and the special discharge process for certain veterans separately.
The expiration date of the revised Discharge Application: Total and Permanent Disability is the same as the expiration date of the previous version of the form (12/31/2011). The revised form is identified by the notation "Revised 07/2010" in the lower right corner of each page.
Implementation of the Revised Discharge Application: Total and Permanent Disability
The OMB-approved revised Discharge Application: Total and Permanent Disability (expiration date 12/31/2011, revision date 07/2010) is attached to this letter. In light of the significant changes to the total and permanent disability discharge provisions that took effect July 1, 2010, program participants are urged to begin distributing the revised form to borrowers as soon as possible. Beginning November 1, 2010, only the attached revised form may be provided to borrowers. However, the previous version of the form (expiration date 12/31/2011, without a revision date) may continue to be accepted from borrowers until January 31, 2011. The Department will reject a total and permanent disability assignment or referral submitted by a loan holder if the assignment or referral package includes the previous version of the discharge application with a receipt date that is after January 31, 2011.
Review of Discharge Applications Received On or After July 1, 2010 Using Prior Version of Form
The October 29, 2009 final regulations revised the definition of "totally and permanently disabled" effective July 1, 2010. Therefore, loan holders (lenders and guaranty agencies in the FFEL Program, and schools in the Perkins Loan Program) must evaluate all total and permanent disability discharge applications submitted by borrowers using the prior version of the form and received on or after July 1, 2010 in accordance with the revised definition of "totally and permanently disabled," even though the form reflects the definition of this term that was in effect before July 1.
Effective July 1, 2010, "totally and permanently disabled" is defined as 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 can be expected to result in death, that has lasted for a continuous period of not less than 60 months, or that can be expected to last for a continuous period of not less than 60 months;
(2) Has been determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected disability.
The amended regulations define "substantial gainful activity" as a level of work performed for pay or profit that involves doing significant physical or mental activities, or a combination of both.
Under the regulations that were in effect prior to July 1, 2010, "totally and permanently disabled" was defined as 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. Because this definition is more restrictive than the amended definition, any borrower who meets the pre-July 1, 2010 definition of "totally and permanently disabled," as certified by a physician on the prior version of the discharge application, would be considered totally and permanently disabled in accordance with the revised definition of that term.
In some cases, the information provided by a physician on the prior version of the discharge application may indicate that the borrower would not have qualified as totally and permanently disabled in accordance with the pre-July 1, 2010 definition of that term, but may be sufficient to support the conclusion that the borrower is totally and permanently disabled in accordance with the amended definition. If it is unclear whether the borrower is totally and permanently disabled in accordance with the amended definition, the loan holder should follow up with the physician. If the physician provides additional information to support the conclusion that the borrower is totally and permanently disabled in accordance with the new definition, the loan holder must include documentation of the follow-up with the physician when submitting the borrower's discharge application to the Department for review.
The Department will also apply the new definition of "totally and permanently disabled" when reviewing all discharge requests submitted by borrowers using the prior version of the discharge application that were received by loan holders on or after July 1, 2010.
The attached form instructs the borrower and physician to complete and sign the form in ink. This is to accommodate imaging technology, but a pencil signature does not invalidate a form.
The blank space at the top, bottom, or sides of the form may be used for bar coding.
The attached form must be printed with black ink on white paper. The typeface, point size, and general presentation of the form may not be changed from the version that was approved by OMB. However, program participants may change the order of the program names that appear in the header of the form so that the name of the program for which the form is being used appears first. (For example, a Perkins school could change the order of the program names so that Federal Perkins Loan Program appears first.) In addition, program participants may remove bold type in section headings or may add bold or italic type to the instructions.
FFEL Program loan holders and Perkins school lenders should pre-print the address to which the completed form should be sent, along with appropriate contact information, at the bottom of Page 1 of the form.
Obtaining Copies for Reproduction
The revised form, in both Microsoft Word and PDF format, is provided as an attachment to this letter. The form will also be available in PDF format on the web site of the National Council of Higher Education Loan Programs (NCHELP).
FFEL Program guaranty agencies and Perkins school lenders are responsible for ensuring that the form used is identical to the form approved by OMB. No changes may be made to the form except as expressly authorized above, unless the change is necessary to meet the requirements of individual processing systems and the change does not alter the general layout of the form, result in reduced point size, move text from one page to another, or otherwise change the general presentation of the form.
Jeff Baker, Director
Policy Liaison and Implementation