Author: Catherine M. Callery (Kate)| Louise M. Tarantino

It’s not unusual for our clients to pursue educational opportunities in the hopes of being able to return to the world of work.  And who doesn’t take out a student loan, these days, to pay for schooling?  Also, some of our clients are busily paying off their student loans when they become disabled.

A newly arisen disability status is cause for the loan to be discharged, under the statute and regulations for Perkins loans, the Federal Family Education Loan Program and the Ford Federal Direct Loan Program. The definitions also apply to Defense loans and NDSL loans.

A doctor must certify that the student previously found “disabled” is able to do “substantial gainful activity” (SGA) in order to get a new loan.  The Department of Education (DoE) now proposes to define the terms “substantial gainful activity” and “totally and permanently disabled.”  The proposed definitions differ from those applied by the Social Security Administration (SSA). Announced at 74 Fed. Reg. 36555 (July 23, 2009), the proposed regulations had a comment period which expired in August 2009. http://edocket.access.gpo.gov/2009/E9-16952.htm

Briefly, SGA would be defined here as [a] level of work performed for pay or profit that involves doing significant physical or mental activities, or a combination of both.”  Total and permanent disability 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–

(i) Can be expected to result in death;
(ii) Has lasted for a continuous period of not less than 60 months; or
(iii) Can be expected to last for a continuous period of not less than 60 months; or

(2) Has been determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected disability.

We’ll let you know if these regulations are adopted. Please let us know if you see any negative fall out on claimants’ Social Security cases.