Death and Disability May Now Get You Out of Paying Loans
March 08, 2010
According to a press release from Securian Financial Group, Sallie Mae is adding a total and permanent disability discharge on its Smart Option private student loan. This discharge will forgive the loan if the primary borrower becomes totally and permanently disabled. In addition, Sallie Mae will cancel the Smart Option private student loan if the primary borrower dies.
Securian Financial Group was awarded a contract to administer claims for the new discharge provisions and promises to give prompt and fair claim reviews.
The new discharge provisions give students peace of mind, knowing that if a tragedy should strike, their families and cosigners will be treated compassionately.
The changes are retroactive, applying to all borrowers since the start of the Smart Option private student loan program in early 2009. (The changes do not apply to other private student loans, such as the Signature student loan.)
This makes Sallie Mae the first national lender to provide such protections on non-federal education loans. (The NYHELPs private student loan also includes a death and disability discharge, but the loan is restricted to New York residents attending colleges in New York.)
Less than 0.4% of outstanding federal student loan volume is subjected to similar discharges each year.