The disqualifying status discharge is one type of false certification discharge. You are eligible for this discharge if, at the time of enrollment, you would not have been able to meet the state requirements for employment in the occupation for which you were being trained. The reasons for failure to meet the minimum requirements could be a physical or mental condition, age, criminal record or any other reason accepted by the Department of Education.
Examples of Disqualifying Status
Juan enrolled in a truck driving program, but had a disability that prevented him from obtaining a truck-driving license in the state where he lived. He should be eligible for a false certification discharge.
Fred dropped out of school in ninth grade. He went to a cosmetology school in a state that requires cosmetologists to have at least a tenth grade education. Fred should be eligible for a false certification discharge.
Helen has a felony record and served time in prison. She went to a security guard school, not knowing that she could not work as a guard in her state because of her criminal record. She should be eligible for a false certification discharge.
How to Apply for a Disqualifying Status Discharge
In most cases, you will have to fill out a false certification/disqualifying status form to apply. (There are limited cases in which the government will accept an oral application). You should send by certified mail and get a receipt.
There is no deadline to apply for these discharges. Direct Loan borrowers must apply to the Department of Education and FFEL borrowers should apply to the lender or agency holding the loan. If this is a guaranty agency, the agency is supposed to respond within 90 days.
If the discharge is granted, you are no longer obligated to repay the loan or any charges or costs associated with the loan. In addition, you have the right to be reimbursed for all amounts paid on the loan, whether those payments were voluntary or involuntary. You are no longer in default on these loans and the loan holder must help clean up your credit history. If the discharge is denied, you may first seek review from the Department of Education and then if necessary, appeal to federal court.