Student loans are one of the most difficult types of loans to get out of paying. While creditors for other loans are often willing to negotiate if you have trouble paying and bankruptcy is available as a last resort for dealing with debt you can’t pay, it’s rare to be absolved of responsibility to pay back student loan debt.
That’s not to say there are no circumstances where student debt can be wiped away, though. In fact, there are seven situations where it may be possible to have your student loans discharged. You can find out about these options here, including some details on what you might have to do to qualify.
1. Bankruptcy discharge
Bankruptcy laws don’t make it easy to get your student loan debt eliminated, but it’s possible to discharge student loans in bankruptcy if you meet a high bar. Specifically, you have to prove repaying your loans would be an undue hardship.
While different courts use different tests to evaluate whether repayment is an undue hardship, many use a version of the Brunner test. There are a few parts to it, including whether you’ve made a good faith effort to pay your loans, whether you’ll be able to maintain a reasonable quality of life if you’re made to repay them, and whether repayment difficulties are likely to persist for a long time.
Those with a permanent disability or older people who’ve been struggling for a long time are more likely to be granted discharge, but your success depends on the court you land in as well as how extreme your financial troubles are. Both private and federal loans can be discharged if you can meet this undue burden requirement.
2. Closed school discharge
If you took out student loans to attend a school that closed, you should be able to get federal Direct Loans, FFEL Loans, and Perkins loans discharged. You need to prove you were enrolled in the school or on an approved leave of absence within 120 days of the time it shut its doors. You’ll also have to show you’re not completing an educational program at a comparable school and that you hadn’t completed all your coursework when your school closed.
If you meet the eligibility requirements, you can apply for immediate discharge or become eligible for automatic discharge if your school closed after November 1, 2013. If you opt for automatic discharge, you’ll receive notice from your loan servicer after three years have passed from the date your school closed.
3. Disability discharge
Disability discharge for student loans can absolve you of responsibility for repaying Direct Loans, FFEL Loans, and Perkins Loans. It’s available to people with a total and permanent disability that has lasted for 60 months and will last for another 60 months; as well as for people who qualify for Social Security Disability Benefits or for veterans with service-related disabilities whose medical issues prevent working.
To apply, you need to submit documentation from the VA, the Social Security Administration or your doctor. You’ll need to complete a TPD discharge application and submit it to Nelnet, which administers disability discharges for the Department of Education.
4. Discharge for 911 victims
Spouses and parents of 9/11 victims are eligible for discharge of federal loans they endorsed and/or that were borrowed by the victim. Eligible loans include Stafford Loans, Parent or Graduate PLUS Loans, Perkins Loans, and Loans consolidated prior to 9/11/2001. Victims include those who died or became permanently disabled in the attack, including safety and rescue personnel who were hurt or killed in its aftermath. You’ll need to notify your lender and provide documentation to apply for discharge.
5. False certification discharge
You can be absolved of your responsibility to repay Direct Loans or FFEL Loans if:
- Your college falsely certified you were eligible for a student loan based on your ability to benefit from the training it provides, despite you not meeting the ability-to-benefit requirements.
- Your college falsely certified your eligibility to borrow student loans despite the fact your status at the time you took out the student loan would prevent you from legally working in the field you were being trained for
- Your college signed your promissory note or loan application without your authorization and the money was neither provided to you nor applied to charges you owed the school
- Your college signed for an electronic funds transfer or endorsed your loan check without your knowledge and you didn’t receive the money or have it applied to debt you owed the school
If you meet qualifying requirements, you’ll need to submit an online application with the Department of Education.
6. Identity theft discharge
Identity theft discharge is similar to false certification discharge. You’ll have to show you were a victim and someone took out a student loan in your name that you didn’t benefit from. Documentation such as a copy of a court verdict will likely be necessary, and you’ll have to swear under oath that you were a victim.
7. Unpaid refund discharge
If you withdrew from college and the academic institution was required by federal law to return some of your student loans, you’re eligible for unpaid refund discharge if they failed to do so. You’ll need to contact the college first to try to resolve the issue. If the school is closed or won’t help you, submit a form to your student loan servicer with documentation showing you withdrew.
Make sure you know your rights
If you could qualify for loan discharge, it’s imperative you know your rights. You don’t want to struggle to repay student loans when there’s another option. Check with your loan servicer or the Department of Education to find out how to start the process of making your debt go away for good.