All, I am looking for some guidance on my daughter’s student loan that was recently requested to be paid in full immediately. Here is the back story, she received a full academic scholarship to FIU Law School and moved from Atlanta to Miami last August. Prior to moving, she was diagnosed with a brain tumor in June. She underwent a biopsy in late July, and we waited for the pathology report to determine next steps. She was diagnosed with a rare disease known as Tolosa Hunt. The great news is that it is not cancerous, bad news is that there are no known tried and true treatment plans, however, there are many examples where patients recovered within 6-8 weeks with steroid treatments. Knowing that, we decided to move her to Miami and enroll her in classes. Although her tuition was 100% paid, she took out a federal student loan for around $10,000.00 for living expenses. Unfortunately, the steroid treatment did not work for her, and her condition did not improve. She tried to complete the semester and took her finals. Her ability to study was greatly restricted by her headaches and her ability to focus and this had a negative impact on her final grades. Based on that, she petitioned the school for a medical exception, and it was approved. Essentially, this removed her grades and it’s as if she never attended a class. Part of this process included the notification that her student loans might have to be repaid, which we completely understood and expected, what we didn’t expect is the request to repay the loan in full immediately.
With that, I have a few thoughts/questions; First, she fully intends to resume her education once she recovers from this, secondly, why is the school demanding repayment and not the servicer, and finally, do we have any recourse besides full payment? Thank you in advance for your advice.
Starting Score: EQ-592 TU-606
"First, she fully intends to resume her education once she recovers from this, secondly, why is the school demanding repayment and not the servicer, and finally, do we have any recourse besides full payment?"
Check with the servicer but what usually happens in these situations is the loan is cancelled so the debt immediately becomes due to the school which issued the funds or provided the housing. Did she live on campus? Unfortunately immediate repayment is in the terms of the contract for the loan of the funds when the student drops out. However, the school should have a hardship program. I would start with the servicer of the loan and see if it was cancelled and that is why the school is seeking immediate repayment under the acceleration clause and from there back to the financial aid office to see about a hardship forbearance with them.
Thank you for the response. She lived off campus and used the funds to pay for her living expenses. Fortunately we have the cash to pay it at once but it seems odd to demand full payment upfront, especially with the medical exception and the intent to return to school. I will see who the servicer is and reach out.
Thank you for the suggestion and kind words, not a great thing for your child to go through but we are grateful it is something she will recover from and resume her normal everyday life.