Student Loan Interview Guide

1. Type of loan

1. Type of loan

Is your student loan federally guaranteed or private?

Private loans are subject to Minnesota law and may only be discharged in bankruptcy upon filing a separate adversary action and proving that exempting the loan from discharge would impose an undue hardship on the client.

Federally guaranteed loans are subject to federal law.  While the lender can collect in ways that other lenders cannot, the client has the right to an affordable payment plan.

The remainder of this guide applies only to federally guaranteed loans.

What kind of federally guaranteed loan do you have?

If client knows, skip to the next section.

Was your loan made directly to you, between 1992 and 2010, by a lender other than the school or the U.S. Department of Education?

If yes, client’s loan is a Federal Family Education Loan.  Skip to the next section.

Yes No

Was your loan made directly to you by the U.S. Department of Education?

If yes, client’s loan is a Direct Loan.  Skip to the next section.

Yes No

Was your loan made to your parents on your behalf?

If yes, client’s loan is a PLUS Loan.  Skip to the next section.

Yes No

Was your loan made to you by the school?

If yes, client’s loan is a Perkins Loan.  Skip to the next section.

Yes No

Client instructions:

You can also find out what kind of loans you have by reviewing your loan agreements, or looking on the National Student Loan Data Systems website. You will need to create an account.

http://www.nslds.ed.gov

Yes No

2. Availability of Discharge

2. Availability of Discharge

Did you complete the program for which you took out the student loan?

Yes No

If you did not complete the program, did you fail to do so because the school closed?

If the client answers yes and client’s loan is not a Perkins loan, s/he may be able to apply for a “closed school discharge.”  Click the link below to download the form to apply for the discharge.  

https://myeddebt.ed.gov/borrower/loanFormsPageFormsAction

Yes No

Did you actually agree to take out this loan?

Yes No

If not, did someone (such as the school) forge your signature on the loan contract or on the student loan checks?

If client answers yes and client’s loan is not a Perkins loan, s/he may be able to apply for a “false certification discharge.”  Click the link below to download the form to apply for the discharge.    

https://myeddebt.ed.gov/borrower/loanFormsPageFormsAction

Yes No

Have you been able to work in the field in which you received the training or education paid for by the student loan?

If client answers no and client’s loan is not a Perkins loan, s/he may be able to apply for a “false certification discharge.”  Click the link below to download the form to apply for the discharge.    

https://myeddebt.ed.gov/borrower/loanFormsPageFormsAction

Yes No

Did you have a high school diploma when you enrolled in the course of study?

If client answers no, client’s loan is not a Perkins loan, and client was not given a test to determine his/her ability to benefit from the course of study s/he may be able to apply for a “false certification discharge.”  Click the link below to download the form to apply for the discharge.

https://myeddebt.ed.gov/borrower/loanFormsPageFormsAction

Yes No

Was there something in your background that made you ineligible to work in the occupation for which you were being trained?

Examples include a criminal history, lack of high school diploma, or a visual impairment, if these were necessary to work in the occupation for which the client was being trained.

Yes No

If so, should your school have known that you would be unable to work in the occupation for which they were training or educating you?

If client answers yes and client’s loan is not a Perkins loan, s/he may be able to apply for a “false certification discharge.” Click the link below to download the form to apply for a discharge.

https://myeddebt.ed.gov/borrower/loanFormsPageFormsAction

Yes No

Do you have a disability that prevents you from working and earning money?

Yes No

If yes, do the following:

Request that your doctor or psychiatrist (who is an MD or Doctor of Osteopathy) complete a Loan Discharge for Disability application.  Access the form here. 

Submit the completed form to your lender (whoever is currently collecting on your loan) within 60 days of the date the doctor signed it.

If you receive a discharge your loan may be reinstated under the following circumstances:  (1) you begin earning more than 100% of the poverty level income for a family of two within three years; (2) you take out a new federally guaranteed student loan within three years; or (3) you do not return student loans disbursed to you within 120 days prior to the discharge date.

Consult an attorney before taking out any new student loans during the 3 year period after your disability discharge.

Does your doctor say you can’t work?

If yes, the lender will stop collecting on the loan while the discharge application is pending.

3. Deferment and forbearance

3. Deferment and forbearance

Are you able to make any payment on your loan?

If yes, skip to the next section.

Yes No

Are you in default?

If yes, skip to the next question. 

If no, client may request a deferment, which will provide up to three years in which no payments are due and no interest accrues.

Yes No

Are you unable to make payments but are also ineligible for a deferment?

If yes, client may request a forbearance, which will provide a period of time during which no payment or reduced payments are due.  Interest will continue to accrue.

Yes No

4. Affordable repayment plans

4. Affordable repayment plans

Could you make payments on your loan if they were lower?

If client has a Federal Family Education Loan or Direct loan, s/he may request an Income Based Repayment (IBR) plan.

If client has a Direct loan, s/he may also request an Income Contingent Repayment (ICR) plan.  Payments are typically lower under an IBR than ICR plan.

If client has a Perkins loan, s/he should contact the lending school about affordable repayment options.

If client has a Parent PLUS loan, s/he should refinance the loan and obtain a Direct Consolidation loan in order to qualify for an affordable payment plan (only ICRs are available).

Yes No

5. Loan is in default

5. Loan is in default

In general, default occurs upon failure to make payments for nine months.  Visit the National Student Loan Data Systems website to determine if the loan is in default. 

https://www.nslds.ed.gov

Would you like to enter into a payment agreement with your lender?

The client can get a loan out of default by entering into a payment agreement that is acceptable to the lender.  If the loan was originated after July of 1993, the lender is required to take the client’s total financial circumstances into consideration in determining monthly payments.

Yes No

Would you like to consolidate your loan?

Yes No

Has your lender obtained a judgment or order of wage garnishment against you?

If the client answers no, s/he may be eligible for a loan consolidation offered by the U.S. Department of Education.  The client can include all federally subsidized student loans, and the new, consolidated loan will be used to pay off the old loans.  Once the loans are consolidated, the client will no longer be in default and may request a deferment or income-based repayment plan.  The consolidated loan will be discharged after 25 years.

Client may either call 1-800-557-7392 or apply online. 

https://studentaid.ed.gov/sa/repay-loans/consolidation#how-apply

Yes No

Is your main concern that you want to qualify for more loans and grants to go back to school?

If the client answers yes, s/he will be eligible for new loans/grants if s/he makes six consecutive payments that s/he and the lender agree are reasonable and affordable based on the client’s total financial circumstances.  Note that the loan will still be in default for other purposes, such as for collection.

Yes No

Are you able to make nine reasonable and affordable payments within 10 months?

If the client answers yes, making 9 payments within 10 months will rehabilitate the loan.

Yes No

Do you expect to be able to make any significant payments in the foreseeable future? If not, has your lender intercepted your tax refund or garnished your wages?

If client will not be able to make payments and has had tax refunds intercepted and/or wages garnished, client should consider filing for bankruptcy.

Yes No

6. Tax refund seizure

6. Tax refund seizure

Complete this section if the client’s loan is in default.

Have you received a notice that your tax refund will be taken to repay your defaulted student loan?

If client has not received a notice, advise client to get his/her loan out of default.  If client is unable to rehabilitate his/her loan and cannot afford to have his/her tax refund seized, client should file for bankruptcy.  Filing for bankruptcy will protect the tax refund.  Note that the loan will not be discharged unless the client files an adversary suit against the lender and proves undue hardship.

The lender must send the notice to the borrower’s last known address, but actual receipt of the notice is not required.

Yes No

Did you receive this notice less than 60 days ago?

If yes, client may request a review.  Review will be in writing unless an oral hearing is requested.

Yes No

Did you owe the loan when you received the seizure notice?

If yes, the client may have a tax refund seizure defense.

Yes No

Were you in default at the time of the seizure?

If yes, the client may have a tax refund seizure defense and may be able to have the refund returned.

Yes No

Had you entered a repayment agreement when you received the seizure notice?

If yes, the client may have a tax refund seizure defense.

Yes No

Were you eligible for a disability, closed school, or false certification discharge when you received the seizure notice?

If yes, the client may have a tax refund seizure defense.

Yes No

Has your tax refund and/or Earned Income Tax Credit been seized?

Yes No

Did you actually owe the loan at the time of the seizure?

If yes, the client may have a tax refund seizure defense and may be able to have the refund returned.

Yes No

Were you in default when you received the seizure notice?

If yes, the client may have a tax refund seizure defense.

Yes No

Had you applied for a loan discharge at the time of seizure?

If yes, the client may have a tax refund seizure defense and may be able to have the refund returned.

Yes No

Will the seizure cause an emergency, such as foreclosure or eviction?

If yes, some lenders will return the seized tax refund.

Yes No

Client instructions:

If the seizure notice was received more than 60 days ago and/or you do not have a defense, your lender may continue to seize your refunds until the debt is paid or the loan is no longer in default.

7. Wage garnishment

7. Wage garnishment

The lender may garnish wages without getting a judgment and state law exemptions do not apply.

Have you received a notice that your wages will be garnished?

Yes No

What is your weekly income after health insurance premiums and other withholdings have been deducted?

Calculate 15% of the client’s disposable income.  Then subtract 30 times the federal minimum wage (as of June 2014, $217.50) from the client’s disposable income.  The lender may garnish the lesser of the two amounts.  See 15 U.S.C. § 1673 for more information.

Did you request a hearing within 30 days of receiving the wage garnishment notice?

If yes, the garnishment will be stayed while the hearing is pending.  If no, a hearing is available, but the garnishment will proceed.

Yes No

Did you owe the loan when you received the garnishment notice?

If yes, the client may have a garnishment defense.

Yes No

Were you in default when you received the garnishment notice?

If yes, the client may have a garnishment defense.

Yes No

Had you entered a repayment agreement when you received the garnishment notice?

If yes, the client may have a garnishment defense.

Yes No

Were you eligible for a disability, closed school, or false certification discharge when you received the garnishment notice?

If yes, the client may have a garnishment defense.

Yes No

Have you been employed for less than 12 months after an involuntary separation from your previous employment?

If yes, the client may have a garnishment defense under 34 C.F.R. 34.6(c).

Yes No

Would a wage garnishment prevent you from meeting your basic needs?

If yes, the client may qualify for relief due to financial hardship.  The client should complete a financial disclosure form and may be eligible for a reduction or suspension of the garnishment.

Yes No

8. Social security seizure

8. Social security seizure

Have you received a notice that part of your social security check will be taken?

The Department of Education must send a notice to the borrower’s last known address before taking money from his/her social security check.

Yes No

Did you request a hearing within 20 days of receiving the wage garnishment notice?

If yes, the garnishment will be stayed while the hearing is pending.  If no, a hearing is available, but the garnishment will proceed.

The review may either be a written review or an oral hearing.

Yes No

Has the Department of Education already taken money out of your social security check?

If yes, continue.

Yes No

Is your social security check for more than $750?

If no, money cannot be taken from the check.

Yes No

Was more than 15% of your social security check taken?

No more than 15% of a social security check may be taken.

Yes No

Did you owe the loan when you received the social security offset notice?

If yes, the client may have a social security offset defense.

Yes No

Were you in default when you received the social security offset notice?

If yes, the client may have a social security offset defense.

Yes No

Had you entered a repayment agreement when you received the social security offset notice?

If yes, the client may have a social security offset defense.

Yes No

Were you eligible for a disability, closed school, or false certification discharge when you received the social security offset notice?

If yes, the client may have a social security offset defense.

Yes No

Client instructions:

In addition to requesting a hearing, submit a statement of financial status form and if you have a basis for a disability discharge, a disability discharge application.