Repaying Student Loans: Can My Loan Be Discharged?

There are a few circumstances in which your loans can be discharged, but you will need to complete paperwork for all of them.  To obtain the paperwork and make sure you know what information must be submitted please contact your individual servicers if you believe you are eligible for any type of discharge.

SCHOOL CLOSURE LOAN DISCHARGE

Possible Qualification if:

• While you were enrolled in a program the school closed and you could not complete the program of study that the loan was actually taken out for
• You were on a approved leave of absence or attending within 90 days of the school closure

Disqualification Reasons:

• You completed the program through transfer of credits or a teach-out
• You haven’t received a certificate or diploma but did complete all of the program’s coursework
• You withdrew more than 90 days before the school closure for personal reasons
• You complete or are completing a similar program of study at a different school.  (If your loan is discharged and you later complete a comparable program of study you may be required to repay the loan amount discharged).

FALSE CERTIFICATION OF ABILITY TO BENEFIT

Possible Qualification if:

• The school your loan was to cover falsely certified that you would benefit from the program.  Schools are required to certify that you will be able to benefit from the program if you are lacking a high school diploma or GED.

FALSE CERTIFICATION (DISQUALIFYING STATUS)

Possible Qualification if:

• When your loan was certified and originated you had a mental or physical condition or a legal condition or status that bars your legally from gaining employment in the field you decided to study.

UNAUTHORIZED SIGNATURE/PAYMENT LOAN DISCHARGE

Possible Qualification if:

• Your school signed your promissory note or loan application without your authorization and you did not go to class
• Your school signed your Electronic Funds Transfer authorization, master check, or endorsed your loan check without your authorization and did not apply the funds to your school charges or give you the proceeds from the loan.

UNPAID REFUND LOAN DISCHARGE (USUALLY PARTIAL DISCHARGE)

Possible Qualification if:

• You withdrew from school during the refund period that the school published and your school failed to pay a refund of your tuition that is required under state law whether the school is closed or open.

FALSE CERTIFICATION AS A RESULT OF IDENTITY THEFT

Possible Qualification if:

• Your loan was certified falsely due to identity theft

SPOUSES & PARENTS OF 9/11/01 VICTIMS

Possible Qualification if:

• You are the parent or spouse of public servants and other victims of the terrorist attacks on September 11, 2001 who are eligible
• Your child or spouse was a public servant or other victim who became totally and permanently disabled or died due to injuries suffered during the September 11, 2001 terrorist attacks

TOTAL & PERMANENT DISABILITY

Possible Qualification if:

• You are unable to participate in any gainful substantial activity because of mental impairment or physical impairment that is medically determinable and will last (or has lasted) without ceasing for 60 months or more or could result in death.
• Veterans-A service-connected condition has left you unemployable
• If your condition was present when you took out your loan your condition has to have worsened substantially to the point of permanent and total disability.

DECEASED BORROWER

• If the borrower of the loan is deceased then the loan will be discharged, but you must contact the servicer and provide a death certificate.  The last thing a family needs to be worried about after losing a member is repaying their student loans that’s why this discharge is put in place.  You may be wondering why a copy of the certificate is required.  The sad fact is that people will try to lie and get their loan discharged if that is not the case.

The big question I hear a lot is “Will my student loans be discharged with bankruptcy?”  That is a question that is difficult to answer.  The best thing to do if you are filing or have filed bankruptcy is CONTACT YOUR LENDER!  They can tell you how everything will work.  There are certain, very rare, occasions your loans MAY be discharged.

We are nearing the end of our series and upon completion I will be doing a Question and Answer piece about student loan debt.  In the next series we will cover Loan Forgiveness Programs.

There are a few circumstances in which your loans can be discharged, but you will need to complete paperwork for all of them.  I have linked the forms to each type of discharge below.

Check out the other Student Loan articles in this series!

Repaying Student Loans: Intro (Where to Start)

Repaying Student Loans: Section 1 (When do I have to pay and how much?)

Repaying Student Loans: Section 2 (Your Repayment Options)

Repaying Student Loans: Section 3 (What if I can’t make my payment?)

Repaying Student Loans: Section 4  (What if I don’t qualify for deferment?)

Repaying Student Loans: Section 5  (Can my loan be discharged?)

Repaying Student Loans: Section 6   (Loan Forgiveness Programs)

Repaying Student Loans: Section 7  (Loan Consolidations)

Repaying Student Loans: Section 8 (Questions and Answers)