Question:
Does anyone know anything about canceling student loans because of a "total and permanent disability?" Would this cancellation be available for all student loans or just federally insured loans? If a lender seems to be "stonewalling" about offering this option is there any way short of going to court to get them to honor this?

Answer:
So let me try to draw up some kind of picture about what the situation is here. Mind you, this is just a shot in the dark on my part:

1) You borrowed money from a financial institution & because the money is insured by the Federal government (i.e.: my tax dollars) as an educational loan, you were able to get a huge amount of money having no credit, co-signer, or collateral.

2) You did or did not complete your education using the funds(You remember, the ones that you BORROWED from that institution).

3) Some how you believe that you are now disabled whereas when you took out the loan you were not.

4) You believe that the government(i.e.: the rest of us that have to pay our taxes) should pay back your loans for you.

I have a couple of questions to clarify a few things:

1) Were you disabled when you took out the loans?

2) Are you really disabled, or are you one of those people that just likes to collect the checks?

3) When you took out the loan, were you or were you not offered life & disability insurance on the loan?

4) Do you believe that I should really have to pay back the loan for you?

5) How does your disability stop you from working in your field of expertise?

6) Did you complete your degree? Actually I just finished filling out the paperwork for my daughter's subsidized Stafford Loan, and I clearly recall seeing a section of the note that specified that the loan is forgiven under certain circumstances, one of which is permanent and total disability. The original poster's question (which I don't know the answer to) was this: are non-subsidized student loans forgiven under the same circumstances.

When the Congress wrote the law establishing Stafford loans they made the determination that certain recipients should not be required to make repayment. So you see it is not the recipient who "believes that you should have to pay the loan back for them." Rather, the contract is written and executed and the recipient is asking some specific information about it. Hopefully someone will be able to answer the actual question.

Does anyone know anything about canceling student loans because of a "total and permanent disability?" Would this cancellation be available for all student loans or just federally insured loans? If a lender seems to be "stonewalling" about offering this option is there any way short of going to court to get them to honor this?

Your Questions. We don't know your specific type of loans (or country, for that matter--I will ume you are from the U.S hope this does not cause offense :-) ). Some loan servicers have the relevant form available for download. In general and in overview, you must return to the loan servicer a completed, signed, and dated total-and-permanent-disability-cancellation-request form. For federally guaranteed loans, this form will include a section your physician must complete, sign, and date--and which will provide the relevant certifications. The physician must be either a doctor of medicine or osteopathy--and she or he must provide her or his professional license number and state in which licensed. This physician's certifications should:

(1) list the date the disabling condition began,

(2) state that the borrower became unable to work and earn money or go to school as of a specific date (which is later than the time you applied for the loan, unless your condition has substantially deteriorated later)--and that the disabling condition is expected to continue indefinitely or result in death, and

(3) provide the diagnosis of the borrower's present disabling medical condition--specifying the nature, duration, and severity of the borrower's present and future impairments. Any borrower able either at the time of filing of the form, or in the future, to work and earn money or go to school, even on a limited basis, is not considered to have a total and permanent disability for purposes of the statute and regulations controlling the federally guaranteed loans.

Call the servicer and tell it to send you the total-and-permanent-disability-cancellation-request form for federally guaranteed student loans. You are entitled to it. If it is not provided in response to your call; write and request it; list in your letter the problems you have had in your efforts to obtain this form, include the time period involved as well as the dates of any specific requests or relevant calls made (if you remember or have records of these dates). If your loans are not federally guaranteed, the availability of any such cancellation depends on the program; ask--in the same fashion set forth above for the federally guaranteed loans. There is no legitimate reason any such forms should not be provided you; as a loan holder, you are entitled to such information or forms even if it does not directly apply to you.