Discharge of Student Loans:
There are a number of ways to discharge your student loans, meaning that you no longer have to make payments on your loans. This could be because of your job, closure of the school where you received your loans, or having a disability. Discharge of your student loans can also be called “forgiveness” or “cancellation.”
- Forgiveness & Cancellation: There are different types of programs available to forgive or cancel a part
or all of a loan.
- Total and Permanent Disability (TPD) Discharge: allows qualified individuals with disabilities to discharge their loans through the Direct Loan Program, Federal Family Education Loan (FFEL) Program, Perkins Loan Program, and TEACH grants. To be eligible, you must prove you are:
- A veteran with a service-connected disability;
- Receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI); or
- Totally and permanently disabled, according to your licensed doctor. The doctor must provide certification that you are unable to engage in any substantial gainful activity. This must be supported by a medical reason, and that total and permanent disability can be expected to last for a continuous period of not less than 60 months, has lasted for a continuous period of 60 months or more, or can be expected to result in death. If you are receiving SSI or SSDI, you will automatically receive your TPD discharge; you do not have to complete an application for discharge. As of January 1, 2018, if your student loan is forgiven, you do not have to pay federal income tax on the amount of the loan forgiven.
Some private lenders also offer disability discharge options for individuals with disabilities. These lenders may have different rules, so it is important to contact your lenders for more information.
- Death Discharge: When someone with a federal student loan dies, their loan will be discharged. If you have a private loan, details vary.