Will My Student Loan Ever Be Written Off?

Q: Will my student loans ever be written off? Is there a way to write off all or some of my student loan debt?

A: Yes, but only under rare circumstances. A write-off or cancellation releases you from all obligations to repay the loan.

Student loans can be discharged in bankruptcy, but only in extremely rare cases.

You will have to prove that the student loans are an Undue Hardship as determined by a bankruptcy judge. This is a very, very difficult hurdle, and most people cannot meet this requirement.

For the vast majority of people experiencing economic hardship, student loans will not be discharged. Normally, student loans must be repaid even if your declare bankruptcy. This includes federal student loans and private student loans.

Keep in mind that your student loan cannot be written off just because you did not:

1. Complete the program of study at the school (unless you could not complete the program because the school closed),
2. Like the school or program of study, or
3. Obtain employment after completing the program of study.
 
What qualifies my student loan for write-off?
A student loan 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.

What qualifies my student loan for cancellation or forgiveness?
Cancellation or sometimes forgiveness of a student 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, visit www.studentaid.ed.gov

How do I find out if I can get a discharge?
After reviewing the cancellation 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 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. The loan servicer is the organization that handles your monthly billing and accepts loan payments.

If You Cannot Write Off Your Student Loan, You Have Other Options
If you simply cannot afford your student loan payments, you first need to realize that you have options. Many people are in the exact same situation.

Here are the steps you need to take now:

Number One: Contact your lender or loan servicer right away. Your servicer is the company that sends you your monthly statements and collects your payments. Tell them that you are having difficultly and that you would like to know what all of your options are.

Number Two: Ask about income-sensitive and graduated repayment options. Income-sensitive repayment takes your income into account and adjusts the payments accordingly. With graduated repayment, your monthly payments will be small and will increase over time.

Number Three: Ask about deferment and forbearance. If you cannot afford to pay any amount, tell your servicer that you are experiencing financial hardship. Student loan providers have financial hardship programs.

Number Four: Consider consolidating your student loans. A consolidation loan can combine your student loans into one new loan with a new interest rate and lower monthly payments.
 
For federal student loans, visit www.loanconsolidation.ed.gov/ for more information.

For private student loans, ask your loan servicer or search Google for banks that offer private student loan consolidation.

Number Five: IMPORTANT Whatever you do, do not stop making monthly student loan payments. Until you can figure out a temporary solution, it is important that you continue to make payments. If you stop making payments, your account may become delinquent or fall into default. If this happens, you may no longer be eligible for repayment relief programs and your credit could be damaged for years to come.