When you take out student loans, there’s a lot to know about the repayment process and what goes into student loan forgiveness.
To break it down further, forgiveness, cancellation and discharge are all very similar but are used quite differently in the context of student loan debt repayment. Forgiveness or cancellation both pertain to when you no longer have to make student loan payments due to a job you’ve gotten. Government, nonprofit, public education, healthcare, military, veterinary medicine, legal and other jobs in these industries are all within the realm that will allow for student loan forgiveness. Student loan discharge means that you don’t have to make payments on your student loans anymore due to a permanent disability to the school where you got your degree shuts down.
Here are different types of forgivenesses, cancellations and discharges you might encounter:
Public Service Loan Forgiveness
This is student loan forgiveness for those who are employed in the government or nonprofit sectors. Your student loan balance will be forgiven after you have made 120 monthly payments while working for an employer that will qualify you for this type of forgiveness.
Teacher Loan Forgiveness
If you teach for five full years in a low-income school then you could qualify for student loan forgiveness of up to $17,500.
Closed School Discharge
This is for people whose school close while they are enrolled or shortly after you withdraw from the school.
Perkins Loan Cancellation and Discharge
Some who took our a Perkins Loan might be eligible to have all or part of their loan canceled or discharged based on employment or volunteer work.
Total and Permanent Disability Discharge
If you end up permanently disabled, then your student loan is eligible for the cancellation of your federal loans.
Discharge Due to Death
If the person who took out the loan passes away, then those federal student loans taken out will be discharged.
Discharge in Bankruptcy
If you’re in a position where you have to declare bankruptcy, there are some instances where your federal student loans might be discharged. However, this isn’t a quick or easy process to undertake.
Borrower Defense to Repayment
For those who are in the position where their student loans failed to do what they were intended to do related to the educational services that the loan was intended for, then you might be eligible for borrower defense to repayment. The specific requirements will vary, though, depending on when you received the loan.