4-12: Total and Permanent Disability (TPD) Match Process with Social Security Administration Begins

Posted Date: April 12, 2016

Author:  William Leith, Chief Business Operations Officer, Federal Student Aid

Subject: Total and Permanent Disability (TPD) Match Process with Social Security Administration Begins

The Department of Education (the Department) recently announced a new process to identify and assist disabled federal student loan borrowers who may be eligible for Total and Permanent Disability (TPD) loan discharge. The process will greatly simplify the steps needed to obtain a TPD discharge by directly leveraging Social Security Administration (SSA) data to document a borrower’s eligibility. In late 2015, the Department and SSA began to match the borrowers on the National Student Loan Data System (NSLDS) who owe federal student loans or have Teacher Education Assistance for College and Higher Education (TEACH) Grants to the SSA database.

With the first set of matches in 2016, we identified almost 400,000 federal student loan borrowers who receive disability payments and have a medical designation from SSA of “Medical Improvement Not Expected” (MINE), which qualifies them for a TPD discharge.

Beginning on April 18, 2016, borrowers who were positively identified in the match will start to receive a customized letter (a sample letter is attached below) from the Department’s TPD servicer, Nelnet. The mailed letter will explain that the borrower is eligible for loan discharge, and include a TPD application which a borrower can sign and return to start the process of applying for TPD discharge and outlining eligibility.

The borrower notifications will be staggered over a 16-week period. The match process will then be conducted on a quarterly basis – in March, June, September, and December of each year.

In the attachments to this announcement, we provide some summary data about the loan portfolio of the borrower population sent through the match process as well as additional background about the TPD outreach effort.

Impact to Schools and Loan Holders

From an operational perspective, the TPD discharge process does not change. Schools and loan holders should not need to alter existing systems or TPD discharge procedures. In addition, there are no changes to the TPD Loan Holder Notification (LHN) file.

However, schools and loan holders may see an increase in the number of borrowers moving through the TPD discharge process. As a result, we provide the following important reminders to help ensure efficient and timely TPD discharge processing:

  • Processing of Refunds – If a borrower is approved for a TPD discharge, the loan holder is responsible for sending any refunds due to the borrower as of the disability date. The refund(s) must be completed before submitting the assignment to the Department.

  • Reviewing National Student Loan Data System (NSLDS) Information – The Nelnet Total and Permanent Disability Servicer uses NSLDS to retrieve loan holder and contact information to send Loan Holder Notification (LHN) files. To ensure your organization receives LHN files timely, keep both loan holder information and contact information on the NSLDS Professional Web site current. Instructions to add or update this information is provided in an attachment to the May 24, 2013 Electronic Announcement.

  • NSLDS Status Codes – NSLDS status codes should not be updated to DI or DS until after your organization receives the LHN file indicating that the borrower’s application is approved. As a reminder, when the NSLDS status code is updated, it changes the contact codes used for the LHN files. As a result, if your organization updates the status code too early, it will not receive the LHN files with the updated information during the remainder of the TPD discharge process.

  • LHN files – The LHN file is the primary form of communication of TPD discharge information between the Nelnet Total and Permanent Disability Servicer and loan holders. For complete information about the LHN, refer to the May 24, 2013 Electronic Announcement. If your organization does not currently receive a LHN file, it should take the following steps to begin receiving it:

    • Ensure the NSLDS has the correct loan holder listed and/or has the correct contact information listed.

    • Once the information on the NSLDS is verified, contact the Nelnet Total and Permanent Disability Servicer by e-mail at disabilityinformation@nelnet.net or by phone at 888/303-7818. The Nelnet Total and Permanent Disability Servicer will need an e-mail address to send the encrypted manual file. Note: The request to receive LHN files must come from the loan holder.

    Ensure the loan is sent to the TPD Servicer after you receive the LHN file with the reason code “APPAPPR.” Do not send the loan prior to this approval reason code as the borrower has not yet been approved for TPD Discharge.

We appreciate the financial aid community’s support of the TPD discharge process and this new outreach effort.

Attachments/Enclosures:

Total Matches of Borrowers with Disabilities Eligible for Total and Permanent Disability Discharge in PDF Format, 336KB, 1 Page

Background Information about TPD/SSA Match Outreach Effort in PDF Format, 106KB, 2 Pages

Sample TPD/SSA Match Letter in PDF Format, 137KB, 2 Pages

 

Publication Date: 4/12/2016


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