9 Ways To Get Your Federal School Loan Discharged

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With federal student loan payments set to resume on Sept. 1 following a two-year pause, millions of borrowers will soon have another budget expense to deal with — unless they can find other options.

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One of those options is to have their loans discharged. Hundreds of thousands of borrowers have already taken advantage of federal loan discharge programs, Forbes reported, but not everyone qualifies.

A student loan discharge is granted when you are no longer legally required to make payments due to extenuating circumstances and through no fault of your own. This might happen if you have a permanent disability and are unable to work, making it all but impossible to repay your student loan.

This is not the same thing as having your loan forgiven or canceled. Those two options are typically only given to borrowers who work in a specific industry or sector for a set amount of time. For example, the federal government’s Public Service Loan Forgiveness allows qualified individuals to have their student loans cancelled after 10 years or 120 payments.

Here are nine ways to qualify for a student loan discharge, as cited by Forbes.

Total and Permanent Disability

To qualify, Nelnet must be your loan servicer, and you must provide documentation from the U.S. Department of Veterans Affairs, the Social Security Administration or a physician that proves you have a total and permanent disability.

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Borrower Defense to Repayment

This is available if you have a direct loan and you have either been misled by your school or the school was found to have violated state laws. In both cases, you’ll need to prove that this caused you financial harm.

Unpaid Refund

If you got a loan and withdrew from the school before using it, your school might have to return those funds to you or your loan servicer. If the school doesn’t, you might be eligible to have a portion of those loans discharged.

Forgery

If an individual or other entity forged your signature on a student loan document, you could be eligible for discharge.

False Certification

If your school falsely certified your eligibility to get a loan, you might be able to have your direct or Federal Family Education Loan discharged. There are three ways you might qualify:

  • There were problems with your “ability to benefit” exam, either because of the way it was administered or because your school failed to give you the exam.
  • You met the requirements to receive a loan but weren’t eligible to work in your state for the job the school trained you for.
  • Your school signed your name on either the loan application or promissory note without your consent.
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School Closure

If your school closed while you were enrolled or shortly after you graduated, you could be eligible for a discharge. This discharge is available for direct loans, FFEL loans and Perkins loans.

Borrower Death

Federal loans are discharged when the borrower dies. A family member or another representative must provide proof of the death.

Bankruptcy

To qualify for a loan discharge due to bankruptcy, you’ll need to include the loan in your bankruptcy filing and demonstrate that repaying it would cause an undue hardship. The court could rule to discharge some or all of your remaining balance, or restructure the debt to make it easier to repay.

Perkins Loan Discharge

You can get your Perkins Loan discharged through bankruptcy, a school closure, death or total and permanent disability.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.

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