In certain situations student loan borrowers can have their federal student loans discharged, forgiven or cancelled.
Total and Permanent Disability Discharge (TPD)
Federal student loans can be discharged on the basis of a total and permanent disability.
Possible Ways to qualify for Total and Permanent Disability Discharge:
- If the student loan borrower is receiving Supplemental Security Income (SSI) Social Security Disability Insurance (SSDI) benefits which states your next disability review will be scheduled within five to seven years from date of most recent disability decision.
- Veterans who have documentation from Veteran Affairs proving that the student loan borrower has a service-connected disability which makes them unemployable.
- Certification from physician stating the student loan borrower is disabled and cannot participate in any substantial gainful activity due to a mental or physical impairment that has lasted continuous for 60 months or more or can be expected to last 60 months or possible death due to illness.
If the student loan borrower dies, their federal student loans will be discharged. A Parent Plus loan can be discharged if the the parent passes away or the student who the loan is for passes away.
Unauthorized Payment Discharge and False Certification of Student Eligibility
FFEL Loans and Direct Loans may be Discharged if:
- The student loan borrower’s identity was stolen to falsely certify the loan
- The student’s University or College falsely certified their eligibility to receive the loan and the student did not benefit from the schooling
- The students name was signed on promissory note without authorization to do so by the school.
- The student loan borrower’s school deemed the student eligible but the student has a criminal record, mental illness or physical condition that prevents them from receiving gainful employment in the field studied.
Unpaid Refund Discharge
In the case a student loan borrower withdraws from school but the the school didn’t pay the loan holder the refund owed. The unpaid refund amount is only possibly discharged. The student loan borrower should check with the school and their financial aid department for refund policies.
Teacher Loan Forgiveness
Borrowers who are teachers working full time for an educational service agency, secondary school or low income school for five years in a row might be able to have $17,500 of their loans forgiven. FFEL and Direct Loans are eligible if the borrower did not have a balance on October 1st 1998. Plus loans are not eligible for Teacher Loan Forgiveness.
Public Service Loan Forgiveness
Borrowers employed in non profit and specific public service jobs are eligible for Public Service Loan Forgiveness if 120 qualified payments (10 years of payments) are made after October 1st 2007. Only certain repayment plans are counted as qualified payments.
Perkins Loan Discharge and Cancellation
Schools provide their own special type of Perkins Loans cancellation programs for the loans they provide.Some public service jobs are eligible to forgive part of the loan depending on the amount of time worked in the specific public service job.
Some of the Jobs that qualify:
- Medical Tech
- Correction Officer and Police Officers
- Family Services and Child Services workers
- Head Start Employee
- Early Intervention Professional
- Volunteer for ACTION Program and Peace Corps
Perkins Loan Discharge Summary Chart: https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation/charts#perkins-loan-cancellation