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Student Loan Forgiveness (Differences Between Forgiveness, Cancellation, and Discharge)

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Student Loans Loan Forgiveness

Student Loans Loan Forgiveness

You may be eligible for federal student loan forgiveness, cancellation, or discharge under certain circumstances. Find out if you’re eligible for forgiveness based on your employment or other situations by reading up on the many sorts of forgiveness.

Understanding Loan Forgiveness

If your loan is forgiven, canceled, or discharged, you are no longer obligated to make payments on it. Click on the following links to learn more.

Differences Between Forgiveness, Cancellation, and Discharge

In most cases, they all signify the same thing, but in some contexts, the terms have slightly distinct connotations. Forgiveness or cancellation of your loans is the term used when you are no longer responsible for making payments on them as a result of your employment.
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The term “discharge” refers to situations where you are no longer obligated to repay your debts, such as a total and permanent incapacity or the closing of the school from which you acquired your loans.
It’s critical to keep in mind that unless you meet certain requirements, you’re still responsible for repaying your student loans. This is true whether or not you complete your education, land a job related to your field of study, or are content with the education you received with the help of your student loans.
If you signed your promissory note or got the loan while under the age of 18, you are still liable for the debt’s repayment.

Types of Forgiveness, Cancellation, and Discharge

There are a variety of forgiveness, cancellation, and discharge options for federal student loans, as shown in the following overview.

Public Service Loan Forgiveness

There are Direct Loans available.*

The Public Service Loan Forgiveness (PSLF) Program may allow you to earn loan forgiveness if you work for a government agency or non-profit organization.

After you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying company, PSLF will forgive the remaining debt on your Direct Loans.

Teacher Loan Forgiveness

This option is available for both Direct Loans and FFEL Program loans alike.

Your Direct Loan or FFEL Program student loans may be forgiven up to $17,500 if you work full-time in a low-income elementary, secondary, or educational service organization in the United States for five years.

You may not be eligible for both Teacher Loan Forgiveness and Public Service Loan Forgiveness at the same time.

Individuals who previously received Teacher Loan Forgiveness are not subject to this restriction while they are benefiting from the limited PSLF waiver. You may find out more about the PSLF waiver here.

Closed School Discharge

All three types of federal student loans are supported by this option.

Your federal student loan may be discharged if your institution closes during or soon after you withdraw.

Perkins Loan Cancellation and Discharge

Exclusively available for Federal Perkins Loan applications.

A portion or all of your Perkins Loan may be dismissed or canceled if you meet specific criteria (such as employment or volunteer work) (under certain conditions). This includes the cancellation of Perkins Loans for Teachers.

Total and Permanent Disability Discharge

All three types of federal student loans are supported by this option.

You may be eligible for a discharge of your federal student loans and/or TEACH Grant service commitment if you are totally and permanently incapacitated.

Discharge Due to Death

All three types of federal student loans are supported by this option.

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

Discharge in Bankruptcy (in rare cases)

All three types of federal student loans are supported by this option.

After filing for bankruptcy, you may be able to have your federal student loan erased. However, a bankruptcy discharge is not a one-time event.

Borrower Defense to Repayment

There are Direct Loans available.*

Federal student loans may be discharged based on borrower defense to repayment for those who borrowed money for school and were not reimbursed for their educational expenses, as long as the institution was negligent or did not fulfill its obligations. Depending on when you got your loan, the particular requirements for borrower defense to repayment discharge may differ.

False Certification Discharge

This option is available for both Direct Loans and FFEL Program loans alike.

If your school incorrectly confirmed your eligibility for a federal student loan, you may be entitled to a loan discharge.

Unpaid Refund Discharge

This option is available for both Direct Loans and FFEL Program loans alike.

To be eligible for an early discharge of your federal student loans, you must withdraw from school and the school did not make a required return of funds to your loan servicer.

Forgery Discharge

In addition to Direct Loans, there are also FFEL Program loans and Federal Perkins Loans owned by the U.S. Department of Education available.

Creating a fake document, or altering a genuine one, to defraud is known as a forgery. Forgery is a common occurrence for those whose identities have been stolen.

Federal student loans fraudulently obtained in your name may be eligible for a discharge under certain circumstances.

Eligibility for Parent Borrowers

If you die, become totally and permanently incapacitated, or file for bankruptcy, you may be able to get your parent PLUS loan forgiven, just like you can with student loans. If your child dies, you may be able to discharge your parent PLUS debt.

The parent PLUS Loan can also be discharged in any of the following situations:

  • 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

If you think you could be eligible, talk to your loan servicer about it. It’s best to contact the institution that issued your Perkins Loan or their approved loan servicer, for assistance if you do.

Loan Payments During the Application Review Period

Forgiveness, cancellation, or discharge may need that you make payments during the review of your application. If you are required to continue making payments while your loan application is being reviewed, speak with your loan servicer.

My Application Was Approved

If you qualify for full loan forgiveness, cancellation, or discharge, you no longer have to make loan installments. If you are only eligible for part of your debt to be forgiven, canceled, or discharged, you are still liable for the remaining balance.

Certain types of loan discharge may also allow you to receive a refund of the payments you paid on the loan, as well as the removal of any negative information on your credit report relating to past delinquencies or defaults on the loan. The default status may be erased if the loan was discharged. To be eligible for federal aid, you must have no other defaulted loans.

My Application Was Denied

The provisions of the promissory note that you signed to remain in effect even if your application is denied. If you have a Direct Loan or an FFEL Program loan, talk to your loan servicer about your repayment choices. Investigate your available revolving credit options.

You may find out how to get out of default by visiting Getting Out of Default if your loan has fallen into arrears.

Contact your loan servicer if you believe your application was denied in error.

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