Untitled Document

LOUISIANA STUDENT FINANCIAL ASSISTANCE COMMISSION OFFICE OF STUDENT FINANCIAL ASSISTANCE LOAN PROGRAM MEMORANDUM
LPM NO.:	L2002-7	Effective Date:	As Indicated
Pub. Date:	June 24 , 2002	Distribution:	Lenders and Schools
Topic:	Common Manual Update - Total and Permanent Disability Discharge Requirements

To assure that your Common Manual remains current, please record this document on your LPM/LPB index, and retain it in Appendix E of your manual.

The following summary informs schools, lenders, and servicers of the latest Common Manual policy changes. These changes will appear in the manual's next annual update in 2003.

Department of Education Clarification on Implementation of Total and Permanent Disability Discharge Requirements

In May 2002, the Department of Education (the Department) issued Dear Colleague Letter GEN 02-03 which provides clarification regarding the implementation of the total and permanent disability discharge regulations that are effective July 1, 2002. The guidance from the Department modifies the applicable effective date and triggering event of these requirements by specifying that the new regulations are generally based upon the lender's determination of the borrower's eligibility for discharge, rather than the date the lender receives a borrower's completed request.

The effective date/trigger event for Common Manual policy changes to chapters 8 and ^CCI8 have been modified to conform to the Department's guidance. The enclosed "Changes to Effective Date/Trigger Events" Matrix shows the Common Manual affected policies along with the previous effective date/trigger event and the new effective date/trigger event for July 1, 2002. In addition, a technical correction has been made under the subheading "Conditional Discharge Due to Total and Permanent Disability" of subsections 8.2.C and ^CCI8.2.C to coordinate with the effective date/trigger event revision. These changes will appear in the July 2002 Integrated Common Manual.

Changes to Effective Date/Trigger Events
for Common Manual Policies in subsection 8.2.C,^CCI 8.2.C and ^CCI 8.3.B

SOURCE: Department of Education Dear Colleague Letter GEN-02-03 dated May 2002, which prescribed the trigger events for changes effective July 1, 2002 for 34 CFR §682.402(c) and 682.402(r) of the FFELP regulations.

Subject, Subsection, page number, and Summary of Policy Change (July 2002 Version)		Current Effective Date/Trigger Event	New Effective Date/Trigger Event	CM Reference #, Date Approved
1	Payments Received After Date of Disability 8.2.C Total and Permanent Disability Claims ^CCI 8.2.C Total and Permanent Disability Claims ^CCI 8.3.B Claim File Documentation Page 19 Requires that disability claims be purchased on a "conditional" basis and assigned to the Department for 3 years before being fully discharged. Instructs lenders to file the claim with the actual outstanding principal balance, regardless of payments received after the date, certified by the physician, that the borrower became totally and permanently disabled. Provides that, after a lender receives a disability claim payment from the guarantor, the lender must forward to the guarantor any payments subsequently received from or on behalf of the borrower. In addition, at the time the claim is filed, a lender must provide the guarantor with a record of any paymentsreceived after the date, certified by the physician, that the borrower became unable to work and earn money.	Completed total and permanent disability discharge requests received by the lender on or after July 1, 2002.	Total and permanent disability discharge determinations made by the lender on or after July 1, 2002.	Policy 598 (Batch 92), approved April 18, 2002
2	General Discharge Requirements for Total and Permanent Disability Claims 8.2.C Total and Permanent Disability Claims ^CCI 8.2.C Total and Permanent Disability Claims Page 19 States that a borrower's obligation to repay a loan may be discharged if a doctor of medicine or osteopathy, legally authorized to practice in a state, certifies that the borrower is totally and permanently disabled, and removes the language that assumes the loan is canceled in this case. In addition, the revised criteria for establishing the borrower's eligibility for discharge provide that the borrower is not considered totally and permanently disabled on the basis of a condition that existed at the time the loan was made, rather than before he or she applied for the loan.	Completed total and permanent disability discharge requests received by the lender on or after July 1, 2002.	Total and permanent disability discharge determinations made by the lender on or after July 1, 2002.	Policy 599 (Batch 92), approved April 18, 2002
3	Notification Requirements for Total and Permanent Disability 8.2.C Total and Permanent Disability Claims ^CCI 8.2.C Total and Permanent Disability Claims Page 20 Adds borrower notification requirements applicable after the lender has filed a total and permanent disability claim with the guarantor. If the guarantor pays the claim, the lender must notify the borrower that the loan will be assigned to the Department for determination of eligibility for a total and permanent disability discharge. If the guarantor determines that the borrower is not eligible, the claim will be returned to the lender with an explanation of the reason for the denial. The lender must notify the borrower that the application for a disability discharge has been denied. The notification to the borrower must include the basis for the denial and inform the borrower that the lender will resume collection on the loan.	Completed total and permanent disability discharge requests received by the lender on or after July 1, 2002.	Total and permanent disability discharge determinations made by the lender on or after July 1, 2002.	Policy 600 (Batch 92), approved April 18, 2002
4	Conditional Discharge Due to Total and Permanent Disability 8.2.C Total and Permanent Disability Claims ^CCI 8.2.C Total and Permanent Disability Claims Page 20 Adds a description of the conditional discharge period as applicable to borrowers who request a discharge of their loan obligation due to a total and permanent disability. July 1, 2002. July 1, 2002. {No change since this is a Department-enforced policy change.} Policy 601 (Batch 92), approved April 2002.	July 1, 2002.	July 1, 2002. {No change since this is a Department-enforced policy change.}	Policy 601 (Batch 92), approved April 2002.

LOUISIANA STUDENT FINANCIAL ASSISTANCE COMMISSION OFFICE OF STUDENT FINANCIAL ASSISTANCE

LOAN PROGRAM MEMORANDUM

LOUISIANA STUDENT FINANCIAL ASSISTANCE COMMISSION
OFFICE OF STUDENT FINANCIAL ASSISTANCE