You are generally obligated to repay your student loan(s), even if you do not complete your program of study, do not complete the program within the normal timeframe for completing it, are unable to obtain employment after you complete your program, or are otherwise dissatisfied with or do not receive the educational or other services that you purchased from the school. However, there are a few situations in which your loan may be discharged and your repayment obligation cancelled or forgiven.
You become totally and permanently disabled and meet certain additional requirements.
Your loan is discharged in bankruptcy. (Federal student loans are not automatically discharged in bankruptcy. You must prove to the bankruptcy court that repaying the loan would cause undue hardship.)
You are unable to complete your program of study due to the closing of your school.
Your school falsely certified your loan eligibility.
A loan in your name was falsely certified as a result of a crime of identity theft.
Your school failed to refund required loan funds to your lender on your behalf.
Loan Forgiveness Programs
A portion of any student loan(s) you received under the Direct Loan or FFEL program after October 1, 1998 may be forgiven under the Teacher Loan Forgiveness Program. To qualify, you must teach full time for five consecutive years in certain low-income elementary and/or secondary schools or low-income educational service agency and meet certain other qualifications. In addition, you must not have had an outstanding balance on a Direct Loan or FFEL Program loan as of October 1, 1998, or as of the date you obtain a loan after October 1, 1998.
A Public Service Loan Forgiveness Program is also available and will forgive or cancel the remaining balance due on your eligible Direct Loan Program loans after you have made 120 payments on those loans (after October 1, 2007) under certain repayment plans while you are employed in certain public service jobs. You may consolidate your FFEL Program loans into the Direct Loan Program to take advantage of the Public Service Loan Forgiveness Program.
|Discharge/Forgiveness Condition||Amount Discharged/Forgiven||Notes|
|Borrower’s total and permanent disability or death.||100 percent||For a PLUS Loan, includes the death, but not disability, of the student for whom the parents borrowed.|
|Full-time teacher for five consecutive years in a low-income elementary or secondary school or low-income educational service agency. Must meet additional eligibility requirements.||
Up to $5,000 (up to $17,500 for teachers in certain
specialties) of the total loan amount outstanding after completion of
the fifth year of teaching.
Under the Direct and FFEL Consolidation Loan programs, only the portion of the consolidation loan used to repay eligible Direct Loans or FFEL Loans qualifies for loan forgiveness.
For Direct and FFEL subsidized/unsubsidized loan borrowers
with no outstanding balance on a Direct or FFEL Loan on Oct. 1, 1998,
or on the date they received a loan on, or after that date. PLUS
Loans are not eligible.
To find out whether your school or educational agency is considered low-income, go to www.FederalStudentAid.ed.gov. Click on "Students, Parents and Counselors." Or call 1-800-4-FED-AID (1-800-433-3243).
|Bankruptcy (in rare cases)||100 percent||Cancellation is possible only if the bankruptcy court rules that repayment would cause undue hardship.|
|Closed school (before student could complete program of study) or false loan certification.||100 percent||For loans received on or after January 1, 1986.|
|Loan was falsely certified as a result of the crime of identity theft.||100 percent|
|School does not make required return of loan funds to the lender.||Up to the amount that the school was required to return.||For loans received on or after January 1, 1986.|
|For Direct Loan Program Borrowers Only – Full-time employee of a qualifying public service organization. Must meet additional eligibility requirements. FFEL Program borrowers may qualify by consolidating into the Direct Loan Program.||The remaining balance on an eligible Direct Loan will be forgiven for a borrower who makes 120 monthly payments on the loan, under certain repayment plans, after October 1, 2007. Each of the required 120 payments must be made while the borrower is employed full-time by a qualifying public service organization.||For additional information, go to: www.studentaid.ed.gov|