Outcomes
Once you have student loans, there may be some opportunities to have your loans forgiven or canceled or, under certain circumstances, discharged. In this module you will be able to learn more about:
Once you have student loans, there may be some opportunities to have your loans forgiven or canceled or, under certain circumstances, discharged. In this module you will be able to learn more about:
In most circumstances, when you take out a loan you will have to pay back the full amount with interest. Yet in some situations there may be an opportunity to have your loans forgiven, cancelled, or discharged! In terms of loan forgiveness and cancellation, you usually have to sign up and complete the requirements of a program:
Loan Forgiveness/Cancellation: refers to a situation where a borrower is no longer responsible for paying back all or part of their loan due to the job they worked or another scenario
Loan Discharge: situations where a borrower no longer has to repay their loan due to extreme situations like school closure or total and permanent disability
If you have federal student loans, it may be possible to qualify for loan cancellation, forgiveness, or discharge. If you have private loans, you should contact your loan servicer to see what options may exist.
PSLF provides an opportunity for Public Service workers to have their loans forgiven after a certain period of time.
Through this program, full-time teachers in low-income schools may be eligible for loan forgiveness.
All Income-Driven Repayment (IDR) plans come with built-in student loan cancellation after 20-25 years of consistent payments or economic hardship deferment. Unlike other cancellation, forgiveness, or discharge programs, the canceled amount of student loan debt after 20-25 years in an IDR is subject to taxes.
If your school closed while you were still in the process of completing your program, you may be eligible to have 100 percent of your federal loans discharged.
If your application for Closed School Discharge is approved, you may not be able to apply credits earned from the closed school toward a comparable program of study at a different school.
For those with federal Perkins Loans, you may be eligible for cancellation or discharge based on employment, volunteering, or other certain circumstances.
If you find yourself with a total and permanent disability (TPD), you may be able to have your federal loans discharged.
If the borrower of a federal student loan (or the student on whose behalf the loan was taken out in the case of Parent PLUS loans) dies, the loans will be discharged.
In extremely limited cases, your loan may be discharged due to bankruptcy. There is no guarantee that your loan will be discharged until the bankruptcy court makes its determination.
Certain state laws prohibit your school from misleading you or engaging in other misconduct. If you think your school broke the law, you may be eligible for Borrower Defense to Repayment.
In certain cases where your school falsely certified you were eligible for loans, you may qualify for a discharge of your federal loans.
In certain cases, schools are required to return part of your loan to your servicer if you withdraw.
The correct answer is Uncompleted Degree Discharge: If you don’t complete your degree or are not happy with the education you received; you are still responsible for paying back your student loans
Discharge in Bankruptcy.
The correct answer is False: discharge of student loans is generally only granted in extreme situations and may be hard to qualify for.
The correct answer is True: you will not automatically qualify for any of these programs, you need to submit an application
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If you are still a little confused, you may want to review this module.
