Press reports are out about federal efforts to fill the dwindling federal coffers sucked dry because of tax cuts to the wealthy and the Iraq by getting downright medieval about collecting old student loans -- apparently there is no statute of limitations on their collection.
The Debt Collection Improvements Act of 1998 enabled the US Dept of Ed to seize delinquent student loan borrower's paychecks, Social Security checks (including disability checks) and tax refunds without a court order. There is no statute of limitations on these seizures and the feds can sue and file a judgment with the individual's county records office to create a property lien. The feds say they will collect every dollar (don't we need to put these über-collectors on the Halliburton and Enron cases) plus a whopping 28% (who's robbing who here) in fees and interest. While all this is meant to catch student loan deadbeats, many people who are severely disabled are getting caught up in the dragnet by having their Social Security disability benefits attached.
Federal rules say that people who are "totally and permanently disabled" can discharge their student loans, but even that can be tricky, if you can't get a physician to certify that you are disabled.
34 C.F.R. §682.402(c)(1)(i). This code section states as follows: If the secretary has made an initial determination that the borrower is totally and permanently disabled as defined in §682.200(b), the loan is conditionally discharged for up to three years from the date that the borrower became totally and permanently disabled, as certified by a physician. The secretary suspends collection activity on the loan from the date of the initial determination of total and permanent disability until the end of the conditional period. If the borrower satisfies the criteria for a total and permanent disability discharge during and at the end of the conditional discharge period, the balance of the loan is discharged at the end of the conditional discharge period and any payments received after the date the borrower became totally and permanently disabled as certified under §682.402(c)(2), are returned to the sender. “Totally and permanently disabled is defined in §682.200(b) as “[t]he 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.”
Now here is a dumb question: Doesn't the fact an individual is on Social Security disability benefits mean that individual is disabled? Apparently not.
