Student loan discharge or cancellation

Student loan discharge or cancellation

Those who are passing through a tough time and facing lot of difficulties to repay their student loans can apply for a discharge or partially cancellation of the loans. I have gathered some information on the issues that are considered as valid points to discharge a student loan. Hope it will help our community.

1. Death of the student – Student loan can be discharged on the death of the student who borrowed or for whom the parents borrowed.

2. Total and Permanent Disability – Loan could be discharged for the total and permanent disability of the student after the disbursement of the loan.

3. False Certification – If the borrower's ability to take a loan is falsely certified by the school.

4. Closed School – Discharge of student loan could be approved if the school is closed when the borrower is continuing study.

5. Full-time Teaching – Students may be eligible for deferment or cancellation of their loan for teacher service, if they are teaching full time in a teacher shortage area.

6. Military Service – Some student loans can be partially canceled if the borrower joins defense services.

7. Bankruptcy – Student loans can be discharged due to bankruptcy only if the borrower can prove that repayment of the loan will be really hardship.

It could be stated here that not all types of student loans come under these categories and there are some time constraints also. In addition, all of the above mentioned cases are subject to genuine proof. Any more suggestion on this topic would be appreciated.

Regards,
Bryan

i can't pay my student loan installments. it becomes difficult day by day. if i apply for a discharge, can i stop my payments then?

learner

Hi learner,

Welcome to the forums. Your loan holder has the right to accept or deny your application for discharge. So there is uncertainty whether your loan discharge application will be approved. Hence, it will be better for you to pay the installments as usual, until you hear that you have qualified for a discharge.

Once you qualify for a full discharge of your loans, you need not make any payments further.

If you feel that you are going to be defaulter on your payments very soon, you can think of a consolidation program also.

Regards,
Bryan

I have applied for discherge of my loans under the total and permanent disability. How long does this process take?

I have little money, can I get a forbearance while I wait?

Thank you.

Disabled,

You've not mentioned the type of federal loan that you owe. A Federal Perkins Loan is generally put under deferment by your school as soon as you apply for a cancellation.

However, you can definitely apply for forbearance. The options that you can have depend upon the status of your loan and your loan holder. Generally one can apply for forbearance when his/her discharge request is under review.

You can contact to your loan holder or your school authority for this purpose.

Best of luck
Bryan

Thanks for your rapid reply!

I have FFEL/Stafford loans. The loan has been sent to the guarentor for processing. They have the discharge form and extra letters from the Doctor.

He was pretty specific on the form and in the letters, but they have to contact him anyway--hopefully that will not take too long.

I tried to contact the loan holder, but they said thay have (as I said above) sent the loan to the guarator.

I'm hoping this process is not to long. Money is short and I'm a bit worried about the outcome.

Disabled,

FFEL/Stafford Loans can be put under forbearance while waiting for the approval of your loan discharge.

It seems that your loan is with some guarantor agency. You can contact them also to know if they allow forbearance during the evaluation period.

Have patience, lots of works are involved with the process. The authority must check all the papers and documents provided by you, just to make sure that these are correct.

Hope the process does not be too long.
Bryan

I have $35,000 student loan. I have been out of school 6 years. I had a lot of credit card debt (lived off of credit as a student) and back taxes which I have finally paid off after getting a nice paying job 4 years ago. I still have about $2,000 in medical bills and credit to pay off. The Loan Center said they will garnish my wages $300 a month soon if I don't voluntarily start paying. I will have normal expenses, ie; rent, car, insurance, electric, food, gas. They won't give any more forbearances. How can I delay payments until I get medical bills and other credit paid off?

mks928,

Two ways are there to delay your payments; one is forbearance and deferment is the other. It seems that your loans are already under forbearance, so you can go for deferment. But the approval depends upon several facts and some conditions are also applied for deferment. Check out what are the criteria to get deferment approved-
http://www.debtconsolidationcare.com...deferment.html

I think consolidation could be more helpful to you. Consolidation proposes easy monthly installments with lower rate of interest. So it will not be a hardship to continue with timely payments.

It won't be a wise decision to wait for the other debts to be paid off, because once your student loans are defaulted, you might lose some options.

Why don't you place the other debts under consolidation program also? It will help you to pay off all your debts by offering you a proper repayment plan that suits your budget as well.

You can fill out the signup form of this website to get a free counseling and work out your repayment plan.

Best of luck,
Bryan

Can I rehabilitate my loans? It also reduces my payments.

Rehabilitation is definitely a good option to get back the current status when your loan is defaulted, but it has some limitations as well.

• The amount to be paid per month is determined by you and your loan holder. It should be acceptable by both of you. The loan holder can deny to accept the amount proposed by you.
  
• You should pay all the installments timely, failing which will cancel the whole process and a defaulted student loan cannot be rehabilitated twice.

Go through the details of student loan rehabilitation and decide your way out. You can undergo a counseling session also to set the right way.

I owe a student loan over the years i made my payment then fell upon hard times they just started taking money from my wages I have no problem with that because I do owe them it is the amount they are taking I cant hardly live on whats left my wife is diabled and needs weekly therapy she has to suffer and cannot attend we cant afford the 120.00 a week co pay for her to get treatment any way I can get them to take less money out of my wages every week.thank you.

how can I get them to change the amount they are taking from my wages every week

Ken,

Welcome to forums. Student loan is such a liability that supports wage garnishment without a court order. You should have contacted your loan holder when you missed your payment for the first time.

Anyway, I would suggest speaking to your loan holder. Once you explain your situation to them and show your interest in repaying the loan, I think, they will cooperate with you and reduce the amount they are deducting currently.

But you should try to consolidate your loan. It will reduce your monthly payment and that is what you really need. You can also register yourself with this site to get a free consultation.
http://www.debtconsolidationcare.com/signup/

If you need any more information, please ask in the forum.

Yes ken. While negotiating your loan owner always prefer consolidating your loan and try to work out some payment plan. By consolidating you can lower your monthly installments and that will help you alot, since you have to pay for the treatment of your wife.

I am in default on a student loan. I am presently not working and have not for 1 1/2 years, due to medical issues. This student loan was originally taken out in 1988 and 1989, and has never been paid on because of my income...now there is no income...my taxes have been offset for several years, and several thousand dollars of my tax dollars over the years have gone toward this debt...now with all the interest, the loan is more than I ever borrowed in the first place...And the school that I graduated from was closed for worng doing on these student loans and the amount that I originally borrowed is , and has been in quetion ever since graduation. Because of my financial situation, I filed Bankruptcy last year, but my attorney said discharging this loan was not an option. What are my options here? Help!