Soon after graduating from college, Edgar Zakata had a disabling worsening of his epilepsy. Unable to work, he wondered how he would ever repay student loans. (Photo by Nader Khouri for The Washington Post)

Within months of receiving his diploma from Vanguard University near Los Angeles in May 2012, Edgar Zakata started having multiple seizures. He had suffered from epilepsy for most of his life, but medication had always kept the convulsions at bay. Not anymore.

Before he could put his psychology degree to use, Zakata began experiencing up to seven seizures a day. There were visits to the emergency room. There were CAT scans and cocktails of medications to get his condition under control. Nothing worked.

A series of tests suggested it was likely that nothing could be done to prevent the seizures from disrupting his life. He wouldn’t be able to hold down a steady job. And with no source of income, there was no way he could repay the $33,000 he owed in federal and private student loans.

Zakata’s prospects were bad enough for the Department of Education to discharge the $25,000 he owed the government, but not for Sallie Mae to grant a similar disability waiver for the $8,000 it was due.

Instead, the private lender demanded more medical records, more doctors’ letters, more proof. Two years later, the battle is emblematic of the disparities between federal and private student debt collection.

Education loans provided by banks and other financial firms carry fewer protections for the borrower than those offered by the federal government. Private lenders are under no obligation to work with borrowers when they fall behind on payments or, as in Zakata’s case, are unable to repay the debt because of a disability.

Whereas the federal government has rules for income-based repayment, forbearance and waivers for severe disability, there are no industry-wide equivalents governing private lenders. Instead, each bank or financial firm decides whether to institute those policies, and not all do.

Private student loans represent about $104 billion of the $1.12 trillion in outstanding education debt, according to the New York Federal Reserve. There is no clear data on the number of private student lenders, though by some estimates there are fewer than a hundred banks, credit unions and other financial outfits in the market.

Only four private student loan providers — Sallie Mae, Wells Fargo, Discover and New York Higher Education Services Corp. — will cancel a borrowers’ debt in cases of permanent disability. Each has policies that are largely based on the federal government’s guidelines that call for a certified letter from a physician or a Social Security Administration notice of award.

Private lenders are generally opaque about their standards and don’t apply them across the board to all of their loans, said Persis Yu, an attorney at the National Consumer Law Center. Lenders have said some of their loans have been bundled into securities with contract restrictions that prevent adjustments for individual borrowers.

“There is no law that requires them to do anything in the case of disability or death, so borrowers are subject to their individual whims,” Yu said.

Lawmakers are starting to take notice of the disparities. In June, Sen. Tom Harkin (D-Iowa) proposed a provision as part of a higher education package that would require schools to work only with private lenders that discharge loans in the event of a student’s death or permanent disability. While the provision would create some parity between federal and private loans, it offers no guarantee that borrowers like Zakata would be granted a waiver.

Zakata, now 34 and living with his parents in Napa, Calif., tried to stay on top of his student loans as his epilepsy worsened. Hoping that doctors would find a way to control the seizures so he could work, he initially sought to defer his student loan payments.

A CAT scan in February 2013 revealed a tumor on the left side of his brain that doctors suspected caused the sudden escalation of his condition. But days before a surgery to remove the tumor, Zakata said, his doctor canceled the procedure out of concern that the risks would outweigh the benefits. Doctors determined that Zakata had severe refractory epilepsy, a drug-resistent condition.

“He said it was incurable,” Zakata said. “I was in shock and just crying, thinking, ‘What’s my life going to be like? How was I going to pay the money I owed?’ ”


Edgar Zakata keeps a bag of seizure medications he tried, unsuccessfully, after his epilepsy suddenly worsened.  He keeps affirmations in Spanish on the wall of his room. Payments on his federal student loans were waived because of his condition, but Sallie Mae at first denied a similar accommodation. (Photos by Nader Khouri for The Washington Post)

Zakata’s physician recommend he contact his lenders to explain the extent of his disability and seek help. He did.

It took four months before the federal government granted him the waiver, after requesting his medical records and letters from doctors.

Zakata supplied the same documentation to Sallie Mae, but with a different outcome.

Sallie Mae denied his request, saying Zakata had a pre-existing condition that he was aware of when he took out the loans in 2011.

The disability waiver is available only to students who become “permanently disabled because of a condition that began or deteriorated” after the date they obtained the loan, said Nikki Lavoie, a spokeswoman for Navient, the student-loan servicing company that was spun out of Sallie Mae in April and now has Zakata’s loan.

“The guy at Sallie Mae told me, ‘If I knew I had seizures, then why did I apply?’ ” Zakata said.

“I told him that at the time, they were under control. I had a life. I was driving. I had a job. I didn’t know this was going to happen.”

Zakata didn’t give up. By the end of March, he contacted legal aid and began working with an attorney to appeal the lender’s decision. The debt collection calls stopped, and Sallie Mae agreed to have its processing partner, Minnesota Life, review the case again.

But it was far from over.

The lender wanted all of his medical records dating to 2010, proof from the state that his drivers license had been revoked because of his condition and information about his Social Security disability application.

“They’re not disputing that he is permanently disabled,” said Noah Zinner, a senior attorney at Housing and Economic Rights Advocates who represents Zakata. “Periodically they deny him, and then when he follows up, they request all of these new documents.”

Zakata tried to run down the requested material, which meant contacting at least five doctors and three medical centers.

“We sympathize with our customers experiencing medical concerns and rely on the expertise of an experienced third party for timely, consistent and fair processing of disability applications,” Lavoie said.

She added that Navient works with customers facing financial challenges to, in some cases, reduce the interest rate on the loan or lower payments. Roughly $1.7 billion of the private loans the company services are enrolled in a loan modification program.

Navient encouraged Zakata to sign up for a loan modification. The company asked for his household income and for his parents to make payments on the loan, which was in default.

But Navient notified The Washington Post near the end of August that, upon further review, the company had decided to grant Zakata the disability waiver. Zakata, who learned of the decision from a reporter, was relieved. Days later, he received a call from the company informing him of the news. The debt has been discharged.