[Code of Federal Regulations]
[Title 34, Volume 3]
[Revised as of July 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR685.212]

[Page 848-850]
 
                           TITLE 34--EDUCATION
 
             CHAPTER VI--OFFICE OF POSTSECONDARY EDUCATION,
                         DEPARTMENT OF EDUCATION
 
PART 685--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM--Table of Contents
 
                     Subpart B--Borrower Provisions
 
Sec. 685.212  Discharge of a loan obligation.

    (a) Death. (1) If a borrower (or the student on whose behalf a 
parent borrowed a Direct PLUS Loan) dies, the Secretary discharges the 
obligation of the borrower and any endorser to make any further payments 
on the loan based on an original or certified copy of the borrower's (or 
student's in the case of a Direct PLUS loan) death certificate.
    (2) If an original or certified copy of the death certificate is not 
available, the Secretary discharges the loan only based on other 
reliable documentation that establishes, to the Secretary's 
satisfaction, that the borrower (or student) has died. The Secretary 
discharges a loan based on documentation other than an original or 
certified copy of the death certificate only under exceptional 
circumstances and on a case-by-case basis.
    (b) Total and permanent disability. (1) If the Secretary receives 
acceptable documentation that a borrower has become totally and 
permanently disabled, the Secretary discharges the obligation of the 
borrower and any endorser to make any further payments on the loan.
    (2) Except as provided in paragraph (b)(3)(i) of this section, a 
borrower is not considered totally and permanently disabled based on a 
condition that existed at the time the borrower applied for the loan 
unless the borrower's condition substantially deteriorated after the 
loan was made so as to render the borrower totally and permanently 
disabled.
    (3)(i) For a Direct Consolidation Loan, a borrower is considered 
totally and permanently disabled if he or she would be considered 
totally and permanently disabled under paragraphs (b) (1) and (2) of 
this section for all of the loans that were included in the Direct 
Consolidation Loan if those loans had not been consolidated.
    (ii) For the purposes of discharging a loan under paragraph 
(b)(3)(i) of this section, provisions in paragraphs (b) (1) and (2) of 
this section apply to each loan included in the Direct Consolidation 
Loan, even if the loan is not a Direct Loan Program loan.
    (iii) If requested, a borrower seeking to discharge a loan 
obligation under paragraph (b)(3)(i) of this section must provide the 
Secretary with the disbursement dates of the underlying loans.
    (c) Bankruptcy. If a borrower's obligation to repay a loan is 
discharged in

[[Page 849]]

bankruptcy, the Secretary does not require the borrower to make any 
further payments on the loan.
    (d) Closed schools. If a borrower meets the requirements in 
Sec. 685.214, the Secretary discharges the obligation of the borrower 
and any endorser to make any further payments on the loan. In the case 
of a Direct Consolidation Loan, the Secretary discharges the portion of 
the consolidation loan equal to the amount of the discharge applicable 
to any loan disbursed, in whole or in part, on or after January 1, 1986 
that was included in the consolidation loan.
    (e) False certification and unauthorized disbursement. If a borrower 
meets the requirements in Sec. 685.215, the Secretary discharges the 
obligation of the borrower and any endorser to make any further payments 
on the loan. In the case of a Direct Consolidation Loan, the Secretary 
discharges the portion of the consolidation loan equal to the amount of 
the discharge applicable to any loan disbursed, in whole or in part, on 
or after January 1, 1986 that was included in the consolidation loan.
    (f) Unpaid refunds. If a borrower meets the requirements in 
Sec. 685.216, the Secretary discharges the obligation of the borrower 
and any endorser to make any further payments on the amount of the loan 
equal to the unpaid refund and any accrued interest and other charges 
associated with the unpaid refund. In the case of a Direct Consolidation 
Loan, the Secretary discharges the portion of the consolidation loan 
equal to the amount of the unpaid refund owed on any loan disbursed, in 
whole or in part, on or after January 1, 1986 that was included in the 
consolidation loan.
    (g) Payments received after eligibility for discharge. (1) For the 
discharge conditions in paragraphs (a)-(e) of this section. Upon receipt 
of acceptable documentation and approval of the discharge request, the 
Secretary returns to the sender, or, for a discharge based on death, the 
borrower's estate, those payments received after the date that the 
eligibility requirements for discharge were met but prior to the date 
the discharge was approved. The Secretary also returns any payments 
received after the date the discharge was approved.
    (2) For the discharge condition in paragraph (f) of this section. 
Upon receipt of acceptable documentation and approval of the discharge 
request, the Secretary returns to the sender payments received in excess 
of the amount owed on the loan after applying the unpaid refund.
    (h) Teacher loan forgiveness program. If a new borrower meets the 
requirements in Sec. 685.217, the Secretary repays up to $5,000 of the 
borrower's Direct Subsidized Loans, Direct Unsubsidized Loans, and, in 
certain cases, Direct Consolidation Loans.

(Approved by the Office of Management and Budget under control number 
1845-0021)

(Authority: 20 U.S.C. 1087a et seq.)

[59 FR 61690, Dec. 1, 1994, as amended at 61 FR 29900, June 12, 1996; 62 
FR 30412, June 3, 1997; 62 FR 63435, Nov. 28, 1997; 63 FR 34816, June 
26, 1998; 64 FR 58969, Nov. 1, 1999; 65 FR 65629, 65694, Nov. 1, 2000; 
66 FR 34765, June 29, 2001]

    Effective Date Note 1: At 62 FR 63435, Nov. 28, 1997, Sec. 685.212 
was amended by revising paragraph (b), effective July 1, 1998. This 
paragraph contains information collection and recordkeeping requirements 
that will not become effective until approval has been given by the 
Office of Management and Budget.

    Effective Date Note 2: At 65 FR 65694, Nov. 1, 2000, Sec. 685.212 
was amended by revising paragraphs (b) and (g)(1), redesignating 
paragraph (g)(2) as (g)(3), and adding a new paragraph (g)(2), effective 
July 1, 2002. For the convenience of the user, the added and revised 
text is set forth as follows:

Sec. 685.212  Discharge of a loan obligation.

                                * * * * *

    (b) Total and permanent disability. If a borrower meets the 
requirements in Sec. 685.213(c), the Secretary discharges the obligation 
of the borrower and any endorser to make any further payments on the 
loan.

                                * * * * *

    (g) * * *
    (1) For the discharge conditions in paragraphs (a), (c), (d), and 
(e) of this section. Upon receipt of acceptable documentation and 
approval of the discharge request, the Secretary returns to the sender, 
or, for a discharge based on death, the borrower's estate, any payments 
received after the date that the eligibility requirements for discharge 
were met.

[[Page 850]]

    (2) For the discharge condition in paragraph (b) of this section. 
Upon making a final determination of eligibility for discharge based on 
total and permanent disability, the Secretary returns to the sender any 
payments received after the date the borrower became totally and 
permanently disabled, as certified under Sec. 685.213(b).

                                * * * * *