Are you struggling with student loan debt? Do you feel like you’re drowning in payments and interest charges? If so, you’re not alone. Millions of Americans are burdened by student loan debt, and many are looking for ways to discharge their loans.
Discharging your student loan can be a complex and confusing process, but it’s important to understand your options if you want to find relief from your debt. In this article, we’ll explain everything you need to know about discharging your student loan, including the different types of discharge, eligibility requirements, and how to apply for discharge.
What is Discharge of Student Loan?
Discharge of student loan is a legal process that allows borrowers to have their loans forgiven or cancelled. There are several types of discharge, each with its own eligibility requirements and conditions. Discharging your student loan can provide much-needed relief from debt, but it’s important to understand the requirements and implications of each type of discharge before applying.
Types of Student Loan Discharge
Discharge Type |
Description |
|---|---|
Total and Permanent Disability Discharge |
Provides discharge for borrowers who are unable to work due to a permanent disability. |
Death Discharge |
Provides discharge for borrowers who have died. |
Bankruptcy Discharge |
Provides discharge for borrowers who have filed for bankruptcy and meet certain criteria. |
Closed School Discharge |
Provides discharge for borrowers whose school has closed while they were enrolled or shortly after. |
False Certification of Ability to Benefit Discharge |
Provides discharge for borrowers who were approved for loans based on false information provided by the school. |
Unpaid Refund Discharge |
Provides discharge for borrowers whose school failed to refund loan funds to the lender or the borrower. |
Teacher Loan Forgiveness |
Provides forgiveness for teachers who work in low-income schools or educational service agencies and meet certain criteria. |
Total and Permanent Disability Discharge
This type of discharge provides relief for borrowers who are unable to work due to a permanent disability. To be eligible for this discharge, you must provide documentation from a qualified physician stating that you are totally and permanently disabled.
If you are approved for this discharge, your loan will be discharged and you will no longer be required to make payments. However, it’s important to note that discharged loans may be subject to taxation, and you may be required to pay taxes on the discharged amount.
Death Discharge
This type of discharge provides relief for borrowers who have died. If you are the parent of a deceased borrower, you may be eligible for this discharge if you have a PLUS loan taken out on behalf of the student. To apply for this discharge, you must provide a certified copy of the death certificate to the loan servicer.
If you are the spouse of a deceased borrower, you may be eligible for this discharge if you have a joint consolidation loan with the deceased borrower. To apply for this discharge, you must provide a certified copy of the death certificate to the loan servicer.
Bankruptcy Discharge
Bankruptcy discharge provides relief for borrowers who have filed for bankruptcy and meet certain criteria. To be eligible for bankruptcy discharge, you must prove that repaying your loans would cause undue hardship, such as preventing you from maintaining a minimal standard of living.
Bankruptcy discharge is difficult to obtain, and you may need to provide extensive documentation and evidence. Additionally, even if your loans are discharged, it may have a negative impact on your credit score and ability to obtain credit in the future.
Closed School Discharge
This type of discharge provides relief for borrowers whose school has closed while they were enrolled or shortly after. To be eligible for this discharge, you must have been enrolled at the time of the closure or have withdrawn no more than 120 days before the closure.
If you are approved for this discharge, your loan will be cancelled and you will not be required to make payments. Additionally, you may be eligible for reimbursement of payments you have already made on the loan.
False Certification of Ability to Benefit Discharge
This type of discharge provides relief for borrowers who were approved for loans based on false information provided by the school. To be eligible for this discharge, you must prove that the school acted fraudulently or violated state laws related to your loan.
If you are approved for this discharge, your loan will be cancelled and you will not be required to make payments. Additionally, you may be eligible for reimbursement of payments you have already made on the loan.
Unpaid Refund Discharge
This type of discharge provides relief for borrowers whose school failed to refund loan funds to the lender or the borrower. To be eligible for this discharge, you must prove that you were supposed to receive a refund but did not, or that the school failed to return loan funds to the lender.
If you are approved for this discharge, your loan will be cancelled and you will not be required to make payments. Additionally, you may be eligible for reimbursement of payments you have already made on the loan.
Teacher Loan Forgiveness
This type of forgiveness provides relief for teachers who work in low-income schools or educational service agencies and meet certain criteria. To be eligible for this forgiveness, you must have taught for five consecutive years in an eligible school or agency, and meet other requirements related to your loan balance and payment history.
If you are approved for this forgiveness, a portion of your loan will be forgiven, depending on the type of loan you have and the amount you have paid. Additionally, you may be eligible for reimbursement of payments you have already made on the loan.
How to Apply for Student Loan Discharge
If you believe you are eligible for student loan discharge, you should contact your loan servicer or lender to start the process. Depending on the type of discharge you are seeking, you may need to provide documentation, such as tax returns, medical records, or death certificates.
Your loan servicer or lender can guide you through the application process and help you understand the eligibility requirements and documentation needed for each type of discharge. Additionally, you should research each type of discharge and understand the implications of each before applying.
FAQs
What happens if my loan is discharged?
If your loan is discharged, you are no longer required to make payments on the loan. However, discharged loans may be subject to taxation, and you may be required to pay taxes on the discharged amount.
Can I apply for more than one type of discharge?
Yes, you can apply for multiple types of discharge if you meet the eligibility requirements for each type. However, you must submit a separate application for each type of discharge.
Can I still apply for discharge if my loan is in default?
Yes, you can still apply for discharge if your loan is in default. However, some types of discharge may be more difficult to obtain if your loan is in default.
Will applying for discharge affect my credit score?
Applying for discharge may affect your credit score, but the impact will depend on the type of discharge and your individual credit history. In some cases, such as bankruptcy discharge, applying for discharge may have a negative impact on your credit score.
How long does it take to get approved for discharge?
The time it takes to get approved for discharge varies depending on the type of discharge and the documentation required. Some types of discharge may be approved quickly, while others may take several months or even years.
Can I still receive student loans if I’ve had a loan discharged?
If you have had a loan discharged, it may be more difficult to obtain new student loans in the future. Additionally, some types of discharge may have a negative impact on your credit score, which can affect your ability to obtain credit, including student loans.
Is there a limit to the amount of loans that can be discharged?
There is no limit to the amount of loans that can be discharged. However, eligibility requirements and documentation may vary depending on the amount of debt you have and the type of discharge you are seeking.
What is the difference between loan discharge and loan forgiveness?
Loan discharge and loan forgiveness are similar in that they both provide relief from student loan debt. However, discharge refers to the cancellation of a loan due to specific circumstances or conditions, while forgiveness refers to the cancellation of a loan based on meeting certain criteria, such as working in a specific profession or for a specific period of time.
Can I still be sued for a discharged loan?
It is possible to be sued for a discharged loan if you have not complied with the discharge requirements or if there is a dispute over the eligibility for discharge. Additionally, some types of discharge, such as bankruptcy discharge, may not provide complete relief from all debts.
Can I discharge loans from a private lender?
Discharge options for private loans may vary depending on the lender and the state you live in. It’s important to research your options and understand the terms and conditions of your private loans before applying for discharge.
What happens if my discharge application is denied?
If your discharge application is denied, you may be able to appeal the decision or explore other options, such as loan consolidation or repayment plans. It’s important to understand the reasons for the denial and to seek guidance from your loan servicer or lender.
What should I do if I’m struggling with student loan debt?
If you’re struggling with student loan debt, there are several options available to help you manage your debt, including income-driven repayment plans, loan consolidation, and forbearance or deferment. Additionally, you can seek guidance from a financial advisor or debt counselor for assistance in managing your debt.
How can I prevent student loan debt in the future?
To prevent student loan debt in the future, you can explore alternative options for financing your education, such as scholarships, grants, or work-study programs. Additionally, you can consider attending a more affordable school or pursuing a degree that has a high earning potential.
Conclusion
Discharging your student loan can provide much-needed relief from debt, but it’s important to understand the eligibility requirements, implications, and application process for each type of discharge. By understanding your options and taking action, you can find the relief you need and move toward a more stable financial future.
If you’re struggling with student loan debt, don’t hesitate to reach out for help. Whether you need assistance with applying for discharge or managing your debt, there are resources available to help you.
Closing
Discharging your student loan can be a difficult and complex process, but it’s not impossible. By understanding your options and taking action, you can find relief from your debt and move on to a brighter financial future. Remember, you’re not alone, and there are resources available to help you every step of the way.