While at first glance, student loans might seem to be locked in stone until they’re paid in full, there are in fact a number of forms of government debt relief for student loans. With that said, it’s important to understand we’re talking about federal student loans here, rather than those from private lending institutions such as banks. Yes, there are debt relief programs available for those as well, but this discussion is limited to student loans backed by the Fed.

Student Loan Debt Relief

Federal student loans can be forgiven, canceled, or discharged. While all of these have the same result — relief of student debt — they are accomplished in different ways and each has its own set of parameters. Forgiveness and cancellation are usually job-related, while discharge comes about under a different set of circumstances.

Let’s look at each one in more detail.

Student Loan Forgiveness

This method of student loan debt relief is tied to the performance of a service to society. There are public service loan forgiveness programs and teacher loan forgiveness programs.

Public Service Student Loan Forgiveness is granted to people who go to work for the certain government or not-for-profit organizations. Also known as a PSLF, these waive the balance remaining after 10 years (120 months) of qualifying payments have been made while working full time in one of the qualifying positions.

Teacher Loan Forgiveness applies to educators who provide direct instruction for five complete and consecutive academic years in low-income elementary and secondary schools. Teaching in an educational service agency also qualifies you for this benefit. Students will receive up to $17,500 in the forgiveness of Direct Student Loans or Federal Family Education Loan Program obligations.

It’s important to note these two forgiveness programs are either/or. In other words, combining them for a larger benefit is not permitted.

Student Loan Cancellation

Applicable only to Federal Perkins Loans, these cancellations are granted based upon employment of volunteer service similar to those outlined above.

Eligibility and the application procedure for Perkins Loan Cancellation can be found at the StudentAid.gov website.

As we mentioned above, these programs apply only to programs backed by the federal government. If you have private student loans, you can learn more about getting relief for those at the Freedom Debt Relief website.

Student Loan Discharge

Offered to students holding Direct Loans, FFEL Program Loans, and Perkins Loans, discharge can be granted when the school in which you’re enrolled closes. This holds whether you are enrolled at the time the school goes under, or if you leave the school or graduate shortly before it closes.

Student loans can also be discharged if you become totally and permanently disabled, die, or in extremely rare cases, file for federal bankruptcy protection. However, unlike other debts, you must go through a specific process to have federally backed student loans discharged in bankruptcy court.

Basically, the court must decide that repaying your student loans imposes an undue hardship. In such cases, you might get a full discharge, a partial discharge, or revised loan terms to make the obligation less difficult to satisfy.

Other causes for discharge include circumstances in which the school did something or failed to do something related to your loan or to the educational services for which the loan was intended to pay. If it is determined a school falsely declared your eligibility to get a loan, or if it failed to loan funds on your behalf when ordered to do so.

This is but a snapshot of the available government debt relief for student loans. You learn about them in more detail at the Federal Student Aid website.

 

 

 

 

 

 

 

 

 

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