Loan Holder Frequently Asked Questions (FAQs)
Below you will find a series of commonly asked questions that we have received from loan holders and other institutions and agencies regarding the total and permanent disability (TPD) loan discharge process. The questions are grouped together by topics: Forms & Documents, Physician Information, Assignment Reports & Process, Loan Eligibility, and Employment During 3-Year Monitoring Period.
Forms & Documents
- If the discharge application was processed by the guaranty agency for a defaulted account, would you expect to see the guaranty agency's name as the loan holder on the date stamp?
The Department requires that the date stamp contain the following: Borrower's name; Borrower's SSN; Loan holder's name; and Receipt date. If the loan holder is the guaranty agency, the guaranty agency’s name should be on the date stamp.
- If the borrower is incapacitated and cannot sign a statement authorizing representation and the borrower's representative has no legal document stating he or she is the representative, can the application still be accepted?
The application may be accepted. However, you should obtain a statement from the physician verifying the borrower’s incapacitation and the approximate length of time he or she has been incapacitated.
- Will the Department reject disability assignments due to alterations to the form (e.g., adding or correcting physician’s license number, initialing or adding information from a phone call to the physician)?
The Department does not reject assignments for non-substantive alterations such as addition or correction of the physician's license number. Alterations to the physician's responses in the Physician's Certification section of the TPD application, or to the physician's signature or signature date, should be initialed by the physician.
May physicians ignore Question 1 in Section 4 of the discharge application and just attach narrative comments?
No, the physician cannot ignore any question in Section 4 of the discharge application. The physician must answer all questions. See For Physicians–Completing the Form
- Sometimes the TPD applications we receive are accompanied by medical documentation from a physician other than the physician that signed the TPD application. The medical documentation supports the information provided on the application. May we accept this documentation and base our medical review on it, in conjunction with other documentation provided by the certifying physician?
- What kinds of doctors may certify total and permanent disability on the Discharge Application: Total and Permanent Disability (PDF)?
Only a doctor of medicine (M.D.) or osteopathy (D.O.) who is licensed to practice in the United States may certify total and permanent disability on the Discharge Application: Total and Permanent Disability. For this purpose, the United States includes the 50 United States, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, the Republic of the Marshall Islands, and the Federated States of Micronesia and Palau.
Chiropractors, herbalists, physician's assistants, registered nurses, licensed practical nurses (LPNs), Ph.D.s, interns, etc., are not eligible to certify total and permanent loan discharge applications. Typically, a resident physician in training is not a fully licensed M.D. or D.O. However, some states do fully license residents in training. A resident who is fully licensed may certify the application. If this is the case, the loan holder should obtain a copy of the resident’s license to include with the discharge application when it is forwarded to the Department.
- How do we validate the physician’s license?
See Roles and Responsibilities–Loan Holder Responsibilities.
Assignment Reports & Process
- Will the Monthly TPD Accept/Reject Report be delivered by a certain day each month and will it be in a readable format?
The Department will provide the report by the 15th of each month. The report is a .csv file, which is a readable format via MS-Excel.
- Will borrower accounts processed for partial discharge (such as joint consolidations) be included in the monthly assignment report? (Note: These loans are not assigned to the Department.) If these accounts are included, how will they be identified?
Yes, the report will include partial discharges that were either accepted or rejected. They can be identified by $1.00 balance showing in the Principal Balance field. The Department will also continue to send the Monthly Joint Consolidation Report.
- What kind of notification process can we expect from the Department for assignments that are manually submitted?
Loan holders will received a TPD Accept or Reject report listing acceptances and rejections for all manually submitted accounts.
- When we submit assignments to the Department, we are getting rejects for the accounts that have a small balance or no balance. The accounts have small or no balances because the borrower made payments after the physician signed the TPD application.
The Department does not have a minimum balance requirement, but we do require that there be a balance on the assignment (otherwise, there is no obligation to be discharged).
Employment During 3-Year Monitoring Period
- What if the loan holder has evidence that the borrower was working on the date the physician signed the TPD application, or at the time the loan holder is reviewing the application?
The revised definition of “totally and permanently disabled” does not require that a borrower must be totally unable to work. To be considered totally and permanently disabled under the new definition, a borrower (other than certain veterans, for whom there is separate definition of “totally and permanently disabled;” see Veterans Disability Discharge) must be unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that (1) can be expected to result in death, or (2) has lasted for a continuous period of not less than 60 months, or (3) can be expected to last for a continuous period of not less than 60 months. The term “substantial gainful activity” is defined as a level of work performed for pay or profit that involves doing significant physical or mental activities, or a combination of both. The loan holder may find that the borrower is not totally and permanently disabled based on evidence that the borrower was engaged in substantial gainful activity at the time the physician signed the application or is engaged in substantial gainful activity at the time the application is being reviewed.