There is an on going debate with regard to student loans and student loan forgiveness. Some are asking for partial student loan forgiveness. Others are calling for a total forgiveness. Some would like to reform repayment options. While many are of the belief that changes to the current system are unwarranted. This article will review current student loan forgiveness provisions as they stand today.
Current Student Loan forgiveness
Before we review the different student loan forgiveness programs, it is important to know the difference between student loan forgiveness, cancellation and discharge. According to the U.S. Department of Education, if you are no longer required to make payments on your loans due to your job, this is generally referred to as student loan forgiveness or cancellation. On the other hand, the U.S. Department of Education notes that if you are no longer required to make payments on your loans due to other circumstances, such as a total and permanent disability or the closure of the school where you received your loans, this is generally called a student loan discharge.
Now that we have an understanding of the differences between student loan forgiveness, cancellation and discharge, below is a general review of available programs.
Public Service Loan Forgiveness (PSLF)
The PSLF program is generally available to those who are employed by a government or not-for-profit organization. The PSLF program allows for the forgiveness of any remaining balance on Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer. While the requirements may appear simple, it is important to ensure that you satisfy the requirements of this program. Ensure that your payment plan, payments and employer satisfy the requirements of this program. For further information on how to apply and related qualifications with regard to the PSLF program, please click here.
Teacher Loan Forgiveness
Teacher’s loan forgiveness may be available for those who teach full-time for five complete and consecutive academic years in a low-income elementary school, secondary school, or education service agency. Under the Teachers Loan Forgiveness program, you may be eligible for forgiveness of up to $17,500. Specifically, forgiveness may be for your Direct Loan or FFEL Program loans. For further information on the Teacher Loan Forgiveness program, please click here.
Closed School Discharge
Some are in the unfortunate position of having their school close while they are enrolled or soon after they withdraw from the school. Thankfully, these individuals may be eligible to discharge federal student loans accumulated during time at the school. The closed school discharge program is available for Direct Loans, FFEL Program loans, and Perkins Loans. For further information on the Closed School Discharge program, please click here.
Perkins Loan Cancellation and Discharge
The Perkins Loan Cancellation and Discharge program is available for Federal Perkins Loans only. You may be eligible to have all or a portion of your Federal Perkins Loan canceled (based on your employment or volunteer service) or discharged (under certain conditions) under this program. This also includes Perkins Loan Teacher Cancellation. For further information on the Perkins Loan Cancellation and Discharge program, please click here.
Total and Permanent Disability Discharge
Direct Loans, FFEL Program loans, and Perkins Loans may be discharged if you are totally and permanently disabled. You may also be eligible to have your Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligation discharge if you are totally and permanently disabled. For further information on the Total and Permanent Disability Discharge program, please click here.
Discharge Due to Death
In the unfortunate event of death, federal student loans may be discharged due to the death of the borrower or of the student on whose behalf a PLUS loan was taken out. Discharge due to death is available for Direct Loans, FFEL Program loans, and Perkins Loans. For further information on Discharge Due to Death, please click here.
Discharge In Bankruptcy
Student loan holders in rare cases may discharge Direct Loans, FFEL Program loans, and Perkins Loans in bankruptcy. Note that this process is not automatic and we stress, rarely can you discharge student loans in bankruptcy. For more information of student loan forgiveness and cancellation, please click here.
Borrower Defense To Repayment
The Borrower Defense to Repayment program is available if you took out loans to attend a school and the school did something or failed to do something related to your loan or to the educational services that the loan was intended to pay for. This program allows you to discharge your federal student loans based on borrower defense to repayment. The requirements for this program is very specific. Note that the specific requirements to qualify for a borrower defense to repayment discharge vary depending on when you received your loan. For further information on the Borrower Defense to Repayment program, please click here.
False Certification Discharge
For those with Direct Loans and FFEL Program loans, you may be eligible for the False Certification Discharge program. The False Certification Discharge program is available under a very specific situation. You may be eligible for discharge of your federal student loan if your school falsely certified your eligibility to receive the loan. For further information on the False Certification Discharge program, please click here.
Unpaid Refund Discharge
The Unpaid Refund Discharge program is available for a specific situation. If you withdrew from school and the school did not make a required return of loan funds to the loan servicer, you may be eligible for discharge of the portion of your federal student loan(s) that the school failed to return. In particular, this program is available for Direct Loans and FFEL Program loans. For further information on the Unpaid Refund Discharge program, please click here.
Conclusion
There is an on going debate with regard to student loans and student loan forgiveness. Some are asking for partial student loan forgiveness. Others are calling for a total forgiveness. Some would like to reform repayment options. Still, many are of the belief that changes to the current system are unwarranted. Whatever your thought on the current situation, we can all agree that student loans can be a detriment to financial independence. Knowledge is power, if you have student loans, know the programs that are available to you.
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