 |
| |
Yes, but only under rare circumstances. A discharge or cancellation releases you from all obligation to repay the loan.
Your loan (Stafford and PLUS) cannot be discharged or canceled because you didn’t:
- Complete the program of study at the school (unless you could not complete the program because the school closed),
- like the school or program of study, or
- obtain employment after completing the program of study.
|
Discharge refers to the cancellation of a loan, even one in Default, due to school closure, false certification, your death or total and permanent disability.
Cancellation or sometimes “forgiveness” of a loan is based on the borrower performing certain types of service such as teaching in a low-income school. A Defaulted loan cannot be canceled based on qualifying service (e.g. teaching).
For a complete list of discharge and cancellation provisions for Perkins Loans and Stafford Loans, check the following two charts: Perkins Loan Discharge and Cancellation Summary (below) and Stafford and PLUS Loan Discharge and Cancellation Summary (below).
After reviewing the conditions, if you think you qualify, you must apply to the holder of your loan.
- Federal Perkins Loans—Check with the school that made you the loan or with the school’s loan servicing agent.
- Direct Stafford Loans—Contact the Direct Loan Servicing Center at 1-800-848-0979. TTY users can call 1-800-848-0983. Or, go to www.dl.ed.gov.
- FFEL Stafford Loans—Contact your lender or its loan servicing agent.
These rules apply to Stafford and PLUS Loans (for parents and graduate and professional degree students):
- A PLUS Loan cannot be discharged because you or the student didn’t complete your program of study at your school (unless you or the student couldn’t complete the program because the school closed).
- A PLUS Loan cannot be canceled because you or the student didn’t like the school or the program of study.
- A PLUS Loan cannot be canceled because you or the student didn’t obtain employment after completing the program of study.
| Perkins Loan Discharge and Cancellation Summary Chart |
| Cancellation Conditionsa
| Amount Forgiven
|
| Bankruptcy (in rare cases—cancellation is possible only if the bankruptcy court rules that repayment would cause undue hardship) |
100 percent |
| Closed school (before student could complete program of study)—applies to loans received on or after Jan. 1, 1986 |
100 percent |
| Borrower’s total and permanent disability or deathb |
100 percent |
| Full-time teacher in a designated elementary or secondary school serving
students from low-income familiesc |
Up to 100 percent |
| Full-time special education teacher (includes teaching children with
disabilities in a public or other nonprofit elementary or secondary school)c |
Up to 100 percent |
| Full-time qualified professional provider of early intervention services for the disabled |
Up to 100 percent |
| Full-time teacher of math, science, foreign languages, bilingual education, or other fields designated as teacher shortage areas |
Up to 100 percent |
| Full-time employee of a public or nonprofit child- or family-services
agency providing services to high-risk children and their families from
low-income communities |
Up to 100 percent |
| Full-time nurse or medical technician |
Up to 100 percent |
| Full-time law enforcement or corrections officer |
Up to 100 percent |
| Full-time staff member in the education component of a Head Start Program |
Up to 100 percent |
| Vista or Peace Corps volunteer |
Up to 70 percent |
| Service in the U.S. Armed Forces |
Up to 50 percent in areas of
hostilities or imminent danger |
aAs of Oct. 7, 1998, all Perkins Loan borrowers are eligible for all cancellation benefits regardless of when the loan was made or the terms of the borrower’s Promissory Note. However, this benefit is not retroactive to services performed before Oct. 7, 1998.
bTotal and permanent disability is defined as the inability to work and earn money because of an illness or injury that is expected to continue indefinitely or to result in death. If you are determined to be totally and permanently disabled based on a physician’s certification, your loan will be conditionally discharged for up to three years. This conditional discharge period begins on the date you became totally and permanently disabled, as certified by your physician. During this conditional discharge period, you do not have to make payments on your loan(s). To qualify for a final discharge due to total and permanent disability, you must meet the following requirements during the conditional discharge period: (1) your earnings from employment must not exceed the poverty line amount for a family of two; and (2) you must not receive any additional loans under the FFEL, Direct Loan or Perkins Loan programs. If you do not continue to meet these requirements at any time during or at the end of the conditional discharge period, your loan(s) will be taken out of conditional discharge status and you must resume making payments on your loans. You cannot qualify for loan discharge based on a condition that existed before the loan was made, unless a doctor certifies that your condition substantially deteriorated after you obtained the loan. For more information on qualifying for this discharge, review your Promissory Note and Borrower’s Rights and Responsibilities Statement or contact your loan holder.
cDetailed information on teaching service cancellation/deferment options can be found at www.FederalStudentAid.ed.gov. At the site, click on “Students, Parents and Counselors.”
| Stafford and PLUS Loan Discharge and Cancellation Summary Chart
|
| 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 designated elementary or secondary school serving students from low-income families. 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 Stafford Loan borrowers with no outstanding balance on a Direct or FFEL Loan on the date they received a loan. PLUS Loans are not eligible. At least one of the five consecutive years of teaching must occur after the 1997-98 Academic Year.
To find out whether your school is considered a low-income school, 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. |
| False loan certification now includes identity theft. |
100 percent |
Effective July 1, 2006. |
| 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. |
| †Total and permanent disability is defined as the inability to work and earn money because of an illness or injury that is expected to continue indefinitely or to result in death. If you are determined to be totally and permanently disabled based on a physician’s certification, your loan will be conditionally discharged for up to three years. This conditional discharge period begins on the date you became totally and permanently disabled, as certified by your physician. During this conditional discharge period, you do not have to make payments on your loan(s). To qualify for a final discharge due to total and permanent disability, you must meet the following requirements during the conditional discharge period: (1) your earnings from employment must not exceed the poverty line amount for a family of two; and (2) you must not receive any additional loans under the FFEL, Direct Loan or Perkins Loan programs. If you do not continue to meet these requirements at any time during or at the end of the conditional discharge period, your loan(s) will be taken out of conditional discharge status and you must resume making payments on your loans. You cannot qualify for loan discharge based on a condition that existed before the loan was made, unless a doctor certifies that your condition substantially deteriorated after you obtained the loan. For more information on qualifying for this discharge, review your Promissory Note and Borrower’s Rights and Responsibilities Statement or contact your loan holder. |
 |
|
