Flickr user Larry Jacobsen
When you take out federal student loans, your debt does not go away until you have the paid off all loans in their entirety. If you are struggling to make your monthly payments, there are forbearance and deferment programs available that help defer the payments for up to three years but at the end of that period, you will have to start making those payments.
You can get your student loan discharged only under very specific circumstances. Even if your debt is discharged, you must keep in mind that the loan may still be considered taxable income.
Closed School Discharge
You may qualify for a closed school discharge if the institution you are attending closes down while you are in the middle of your program. You had to have been enrolled at the school for a minimum of 120 days prior to closing in order to be eligible for this type of discharge. If you graduated before the school closed, you still have to repay this type of loan.
Discharge for Unauthorized Payment
You can claim discharge for unauthorized payment if you have fallen victim to identity theft. This happens if someone else took a loan out in your name by falsifying your personal and financial information. You did not know about the loan and did not attend that school either.
Discharge for False Certification
If you discover that your school forged signatures on promissory notes or payments, you may be eligible for this option. There are several instances of schools that have since closed that offered false certifications and degrees to students who could not work in their chosen fields because their degree work wasn’t certified. If this happened to you, you can have your federal loans discharged.
Discharge for Total and Permanent Disability
For may be eligible for this type of discharge if you’ve been permanently disabled through either work or by serving in the military. When claiming discharge under this category, you will need to provide supporting documentation from a qualified medical professional to prove that you have total and permanent disability and are unable to engage in gain employment to support yourself and pay off this debt.
When you get your loans discharged due to total and permanent disability, you may be asked to undergo a disability review every 5 to 7 years.
Discharge for an Unpaid Refund
As with false certification, this type of student loan may be discharged if the school did not refund the federal government when it was supposed to. The government may partially discharge these types of loans, but only for the refunded portion from the school.
Discharge Due to Death
All federal student loans are discharged if the borrower passes away. A family member will have to submit the death certificate to the lender before the loan discharge can be processed.
If you feel you may qualify for a loan discharge, contact your lender first to confirm. Make sure you have all the necessary documentation as required by law. Even if you qualify, the lender will not process the discharge unless you submit all documentation. Lastly, make sure you keep enough money set aside for tax purposes.
