Federal student loan borrowers may have their loans discharged outside of bankruptcy under several different programs:
Total and Permanent Disability
Borrowers who can show a TPD may have their loans discharged.
Regulations allow a borrower to request a discharge of loans with a doctor’s certification that they are unable to earn an income due to disability.
Borrowers can also use a Social Security Disability award letter in lieu of the doctor’s certification.
Veterans who the VA deem to be unemployable may also request a discharge of their federal loans.
There is a monitoring period following the approval of a TPD discharge with restrictions on how much income can be earned by the borrower.
Debt discharged through a TPD is taxable income and may result in taxes owed on the amount forgiven.
Closed School Discharge
This allows borrowers who were attending a school that closes while they were enrolled to request that their federal loans be discharged.
Borrowers must show they were unable to complete the program at another school or were unable to transfer credits to another school.
False Certification Discharge
This allows a borrower to request the discharge of loans when a school falsely certifies that the student was eligible for the loan.
A student who did not graduate from high school or get an equivalent certification is not an eligible student.
Borrowers may also apply for a false certification discharge in the case of identity theft.
Death Discharge
This allows a loan discharge for a parent or surviving spouse if the student borrower dies.
Teacher Loan Forgiveness Program
This allows teachers to have up to $17,500 of federal student loans forgiven if they meet repayment requirements.
Public Service Loan Forgiveness Program
This allows borrowers employed in public service to have the balance of their loans forgiven after 120 loan payments.
There are restrictions on the type of employer that qualifies for this program. It is only available to borrowers with direct federal loans.
Many borrowers with loans guaranteed by a state guaranty agency or non-profit and insured by the federal government are not eligible.
The regulations state that debt forgiven under the Public Service Loan Forgiveness Program is not taxable income.
September 11th Attack Survivors/Victims
Survivors or eligible victims of the September 11th attacks may request the discharge of their federal student loans.
