Common Grounds for Discharge, Cancellation, or Forgiveness of Student Loans

February 3, 2015

If you qualify for student loan cancellation and submit a successful application, then you could completely discharge your obligation to repay your student loan debt. Student loan discharge, cancellation, or forgiveness, is granted to certain individuals who fit a specific set of requirements, and who submit an application to their loan provider.  Read more to find out about some of the most common grounds for discharge.  To find out your best option for loan repayment and discharge, contact an experienced student loan debt attorney at JRQ & Associates.

 

Bankruptcy

 

  • If you file a Chapter 7 bankruptcy and make a showing of undue hardship, your loan can be completely wiped out. 

 

  • If you file a Chapter 13 bankruptcy, your loan can be reduced and be made part of one fixed, affordable monthly payment under the bankruptcy plan. 

 

  • For more information on this topic, follow this link here.

 

Total and Permanent Disability (TPD)

 

  • In order to claim TPD, you must have a physician’s certification and medical records to prove that you have a total and permanent disability that prevents you from engaging in substantial gainful activity, and that you have been suffering from the disability at least 5 years, or expect to suffer for at least 5 years.

 

  • Substantial medical records are required in order to prove this, but there are relaxed requirement for veterans if the Department of Veterans Affairs first determines that the veteran is unemployable due to a service-related condition.

 

Death

 

  • For Federal student loans, the death of the borrower means the loan will be discharged.

 

  • For Parent PLUS Loan Borrowers, the loan can be discharged if the parent or student dies.  The loan servicer will typically require proof along with an application.

 

School Closure

 

  • If you took out a loan to pay for tuition at a school that closed, or was near closure when you withdrew, and the closure prevented you from finishing your intended program, then you may be able to discharge that debt.

 

  • This discharge only applies to certain types of loans (FFEL, Direct, Perkins), and you must submit an application to the loan provider.

 

  • In general, you will be eligible only if the school closed before you began the program, while you were enrolled, or 90 days after you withdrew from the school.  Certain exceptions can be made, but are difficult to prove without the help of an experienced attorney.

 

False Certification

 

  • If the school you attended falsely certified that you would be eligible to benefit from a certain program, but failed, for example, to administer a proper test, then you can potentially obtain a discharge.

 

  • Your loan can also be forgiven if the school you attended falsely certified your eligibility for entry into a certain profession or program, but which you are disqualified from employment in due to a physical or mental condition, criminal history, or another reason.

 

  • In both of these situations, the evidence required is very complicated and best accomplished with professional help.

 

Unpaid Refund

 

  • You can obtain a full or partial cancellation for certain types of loans if your school failed to pay back a refund it owed you because you withdrew from the school or never attended.

 

  • You will only be able to discharge the amount of the unpaid refund.

 

Fraud

 

  • You can obtain loan forgiveness if you can show that the school or an identity theft forged your signature on a loan application or check.

 

Work in Certain Occupations

 

  • If you are employed as a teacher in a low-income school, or employed in certain public service jobs, then you may be able to get a portion or the remaining balance of your loan forgiven.

 

  • This is only available for certain types of Federal student loans.

 

  • For Perkins loan borrowers, there are a completely different set of standards, which allow for discharge based on the type and length of public service employment.

 

Defenses to Loan

 

If you are in default and have been sued for payment, you may be able to raise a defense and avoid paying the debt.  Some common defenses include:

 

  • That the debt has already been discharged in bankruptcy

 

  • That your private loan lender failed to sue you in time according to the statute of limitations

 

  • That you are current on your payments or are currently repaying under a valid re-payment plan

 

  • That the loan is unenforceable 

 

  • For more information on this topic, continue reading here.

 

You should know that discharge can apply to all or part of your student loan debt, and will only be available for certain types of loans.  Contact an experienced student loan debt attorney at JRQ & Associates to find out if you qualify for student loan forgiveness and let an experienced student loan attorney help you put together a successful application. 

 

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