Lenders With Borrowers Now Ineligible for Hurricane Discharge Should Contact USA Funds’ Guarantor-Servicer

The U.S. Department of Education recently advised that some borrowers incorrectly were deemed eligible for education-loan discharges as students of schools affected by the 2005 hurricanes.

The schools that those borrowers attended will notify lenders of their borrowers who incorrectly were listed as eligible for the discharges.

If a USA Funds^®  lender-customer has received a discharge payment for a borrower who now has been determined to be ineligible, USA Funds advises that the lender must return the discharge payment to USA Funds’ guarantor-servicer, with a note that clearly indicates that the mail contains a return of a hurricane-discharge payment, to the following address:

  Phillip Luzader
  Supervisor, Financial Operations
  MC 8303
  SLM Corp.
  11100 USA Parkway
  Fishers, IN 46038

In addition, the lender must increase the student’s loan balance accordingly.

For a lender-customer that receives notice from a school that a borrower is not eligible for the discharge, but the lender hasn’t yet received a discharge payment, the lender immediately must contact USA Funds’ guarantor-servicer to ensure that it does not issue a discharge payment for the borrower. The lender must provide this information to Teresa Perry, project coordinator, at (317) 578-6059 or by e-mail.

The Department previously issued guidance that permitted the discharge of certain education loans made to students attending hurricane-affected schools. You will need Adobe Acrobat Reader to access the Department’s earlier guidance.