In general, you're required to fully repay all of the student loans you borrow, with interest. However, a few circumstances can get you off the hook for some or all of the amount you owe—though most of them aren't very desirable. Here's a list of the things that may qualify you for student loan discharge:
- You or the student benefiting from the loan (for Parent PLUS loans) died.
- In some rare cases, you declared bankruptcy.
- You became totally and permanently disabled.
- Before you could complete your program of study, your school closed.
- Your school admitted you even though you did not have the ability to benefit from the coursework.
- Your school falsely certified your qualifying status.
- Your school falsely signed your promissory note.
- Someone was convicted of stealing your identity and fraudulently taking out a loan in your name that you did not benefit from.
- Your school owes your lender a refund.
Note: The amount discharged may be taxable.
How To Apply For Discharge
The circumstances that qualify you for student loan discharge certainly aren't easy to deal with. However, being granted a discharge can require some effort, too. Here's how to apply for each type:
If you (or the student benefiting from the loan, for parent PLUS loans) die, your student loans can be discharged by sending an original or certified copy of the death certificate to the loan holder(s).
Student loans can be discharged through bankruptcy, but it will take some work. You'll need to convince the bankruptcy judge that you're unlikely to ever be able to repay your loans.
It's recommended that you hire a qualified bankruptcy attorney for the bankruptcy proceedings. Once you file for bankruptcy, your creditors generally aren't permitted to collect from you for the duration of the bankruptcy case, so be sure to inform all of your creditors when you've filed.
If you're unable to work due to an illness or injury that's expected to last at least 5 years, your loans may be discharged due to total and permanent disability. There are a few different ways to apply for this type of loan discharge, so be sure to read the instructions carefully.
If you couldn't finish your college program because your school closed while you were attending it, or if you withdrew within 120 days of the school closing, your loans may be eligible for forgiveness.
Your loans may be eligible for this type of discharge if you (or the student benefiting from a parent PLUS loan) were admitted to college even though you didn't meet the admissions requirements and can't benefit from the program. For example, you didn't have a GED or high school diploma and the school didn't provide an adequate test of your ability to benefit from higher education. Note: Not being able to find a job in your field doesn't make you eligible.
You (or the student benefiting from a parent PLUS loan) may be able to have a portion or all of your federal student loan debt obligation discharged if your school knowingly allowed you to enroll in a career program despite the fact that you weren’t able to meet the state's legal requirements for working in that field due to a disability, criminal record, or other disqualification.
You could qualify for this type of discharge if your school falsely signed your name on your loan application or master promissory note (MPN) without your permission and you didn't benefit from the loan. You can only qualify if the loan money wasn't credited to your account, paid to you, or used to pay your tuition and fees. Parent PLUS loan borrowers are also eligible for this discharge if the student that the loan was borrowed for meets the same criteria.
If you're a victim of identity theft, and someone was convicted of borrowing federal student loans in your name which you did not benefit from, you may be able to have those loans discharged. The application form is the same one used for unauthorized signature loan discharge.
If a portion or all of your federal student loans was supposed to have been returned to your lender and your school did not return all of the funds, you may qualify for this type of discharge. Parent PLUS loan borrowers are also eligible for this discharge if the student that the loan was borrowed for meets the same criteria.
One example of how this can happen is if you withdraw from school before the beginning of a semester, but your school keeps the tuition money you borrowed. Schools are required by law to return these funds to the lender. So, the portion of the loan that should have been returned and wasn't would be eligible for discharge.
It's Not All Bad
You may also be able to get relief from some or all of your student loan debt through forgiveness programs. These are slightly different from discharge programs, and you could qualify for more pleasant reasons—like having a job with a public service or nonprofit employer.