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Student Loan Cancellation Basics

Student Loan Cancellation Basics: When Should You Apply For Help

Understanding Loan Cancellation, Forgiveness and Discharge

FAQs on student loan cancellation basics provide forgiveness, cancellation or discharge of your loan, which means that you are no longer required to repay.

The following are FAQs (Frequently Asked Questions) that I commonly receive regarding student loan cancellation.

My article https://www.ruralmoney.com/student-loan-forgiveness/, while providing some general information about student loan forgiveness, only scratch the surface of how to get student loan forgiveness, cancellation and discharge.

Differences Between Forgiveness, Cancellation, and Discharge

The terms forgiveness, cancellation, and discharge mean nearly the same thing, but they’re used in different ways. If you’re no longer required to make payments on your loans due to your job, this is generally called forgiveness or cancellation. If you’re 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 discharge.

It’s important to remember that outside of the circumstances that may qualify you to have your loans forgiven, canceled, or discharged, you remain responsible for repaying your loan—whether or not you complete your education, find a job related to your program of study, or are happy with the education you paid for with your loan. Even if you were a minor (under the age of 18) when you signed your promissory note or received the loan, you are still responsible for repaying your loan.

The summaries below offer a quick view of the types of forgiveness, cancellation, and discharge available for the different types of federal student loans.

  • How to apply for a public service loan forgiveness?
  • How to apply for a teacher loan forgiveness
  • How to apply for a closed school discharge
  • How to apply for a Perkins Loan cancellation and discharge?
  • How to apply for a totally and permanent disability discharge?
  • How to apply for a discharge due to death?
  • How to apply for a discharge in bankruptcy (in rare cases)?
  • How to apply for a borrower defense to repayment?
  • How to apply for a false certification discharge?
  • How to apply for an unpaid refund discharge?
  • What is the eligibility for parent borrowers?
  • How to apply for forgiveness?
  • Do I have to make loan payments during the application review process?
  • What happens when my application is approved?
  • What happens if my application is denied?

How to apply for a public service loan forgiveness?

Available for Direct Loans.* — If you are employed by a government or not-for-profit organization, you may be able to receive loan forgiveness under the Public Service Loan Forgiveness (PSLF) Program.

PSLF forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

*Federal Family Education Loan (FFEL) Program loans and Perkins Loans may become eligible for Public Service Loan Forgiveness if they are consolidated into the Direct Loan Program.

Learn more about the PSLF Program to see whether you might qualify

How to apply for a teacher loan forgiveness?

Available for Direct Loans and FFEL Program loans.

If you teach full-time for five complete and consecutive academic years in a low-income elementary school, secondary school, or educational service agencyyou may be eligible for forgiveness of up to $17,500 on your Direct Loan or FFEL Program loans.

Learn more about the Teacher Loan Forgiveness Program, eligibility requirements, and how to apply.

Note: You may not receive a benefit for the same qualifying payments or period of service for Teacher Loan Forgiveness and Public Service Loan Forgiveness.

How to apply for a closed school discharge?

Available for Direct Loans, FFEL Program loans, and Perkins Loans.

If your school closes while you’re enrolled or soon after you withdraw, you may be eligible for discharge of your federal student loan.

Learn about the eligibility requirements for closed school discharge and how you can apply.

How to apply for a Perkins Loan cancellation and discharge?

Available only for Federal Perkins Loans.

You may be eligible to have all or a portion of your Perkins Loan canceled (based on your employment or volunteer service) or discharged (under certain conditions). This includes Perkins Loan Teacher Cancellation.

Learn more about Perkins Loan Cancellation and Discharge to see whether you are eligible and how to apply.

How to apply for a total and permanent disability discharge?

Available for Direct Loans, FFEL Program loans, and Perkins Loans.

If you’re totally and permanently disabled, you may qualify for a discharge of your federal student loans and/or Teacher Education Assistance for College and Higher Education (TEACH) Grant service obligation.

Learn more about the Total and Permanent Disability Discharge process, eligibility requirements, and how to apply.

How to apply for a discharge due to death?

Available for Direct Loans, FFEL Program loans, and Perkins Loans.

Federal student loans will be discharged due to the death of the borrower or of the student on whose behalf a PLUS loan was taken out.

Learn more about discharge due to death and what documentation is needed for discharge.

How to apply for a discharge in bankruptcy (in rare cases)?

Available for Direct Loans, FFEL Program loans, and Perkins Loans.

In some cases, you can have your federal student loan discharged after declaring bankruptcy. However, discharge in bankruptcy is not an automatic process.

Learn about the process required to have federal student loans discharged in bankruptcy.

How to apply for a borrower defense to repayment?

Available for Direct Loans.*

You may be eligible for discharge of your federal student loans based on borrower defense to repayment if you took out the 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. The specific requirements to qualify for a borrower defense to repayment discharge vary depending on when you received your loan.

*Federal Family Education Loan (FFEL) Program loans and Perkins Loans may become eligible for borrower defense discharge if they are consolidated into the Direct Loan Program.

Learn about borrower defense to repayment process, eligibility requirements, and how to apply.

How to apply for a false certification discharge?

Available for Direct Loans and FFEL Program loans.

You might be eligible for a discharge of your federal student loan if your school falsely certified your eligibility to receive a loan.

Learn about false certification discharge to see whether you might qualify and how to apply.

How to apply for an unpaid refund discharge?

Available for Direct Loans and FFEL Program loans.

If you withdrew from school and the school didn’t make a required return of loan funds to the loan servicer, you might be eligible for a discharge of the portion of your federal student loan(s) that the school failed to return.

Learn more about the unpaid refund discharge to see whether you might qualify.

What is the eligibility for parent borrowers?

As with loans made to students, a parent PLUS loan can be discharged if you die, if you (not the student on whose behalf you obtained the loan) become totally and permanently disabled, or if your loan is discharged in bankruptcy. Your parent PLUS loan may also be discharged if the child for whom you borrowed dies.

In addition, all or a portion of a parent PLUS Loan may be discharged in any of these circumstances:

  • The student for whom you borrowed could not complete his or her program because the school closed.
  • Your eligibility to receive the loan was falsely certified by the school.
  • Your eligibility to receive the loan was falsely certified through identity theft.
  • The student withdrew from school, but the school didn’t pay a refund of your loan money that it was required to pay under applicable laws and regulations.

Contact your loan servicer for more information. 

How to apply for forgiveness?

Contact your loan servicer if you think you qualify. If you have a Perkins Loan, you should contact the school that made the loan or the loan servicer the school has designated.

Do I have to make loan payments during the application review process?

Depending on the type of forgiveness, cancellation, or discharge you’re applying for, you may have to make payments during your application review. Check with your loan servicer to find out whether you must continue making payments during the application review period.

What happens when my application is approved?

If you qualify for forgiveness, cancellation, or discharge of the full amount of your loan, you are no longer obligated to make loan payments. If you qualify for forgiveness, cancellation, or discharge of only a portion of your loan, you are responsible for repaying the remaining balance.

If you qualify for certain types of loan discharge, you may also receive a refund of some or all of the payments you made on the loan, and any adverse information related to your delinquency or default on the loan may be deleted from your credit record. If the loan was in default, the discharge may erase the default status. If you have no other defaulted loans, you would regain eligibility for federal student aid.

What happens if my application was denied?

If your application was denied, you’ll remain responsible for repaying your loan according to the terms of the promissory note that you signed. Talk to your loan servicer about repayment options if you have a Direct Loan or FFEL Program loan. Check out repayment options.

If your loan is in default, visit Getting Out of Default to find out how to begin repaying your loan and your options for getting out of default.

If you believe that your application was denied in error, contact your loan servicer for more information.

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