August 29, 2008, Newsletter Issue #83: Death Or Disability Of The Borrower

Tip of the Week

Your death will cause enough of a burden on your family without the additional worry of having to deal with your student loan payments. The federal government understands this and allows a complete discharge of this debt in the event of your death. In these circumstances, your family should get a copy of your official death certificate and contact your lender to notify them as soon as possible. To make this process easier, keep information regarding your student loans in safe place that will be easily accessible.

In addition, if you find yourself in a situation where you are dealing with a permanent disability, you should contact the servicing agency for your student loans to apply for forgiveness of your debt. Rather than immediately discharging the debt based on medical information provided, full forgiveness will not occur until you have been permanently disabled for three years. You are not required to make payments while waiting for the final decision. During this lengthy process, if you recover, you will once again be responsible for your debt. Other requirements include having no or limited income (below the poverty level) and you are not eligible to receive additional student loans while going through this process.

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