Skip Navigation

Cancel or Discharge a Loan

This page describes several situations that might allow you to have your loan cancelled or discharged:

Total and permanent disability (TPD)

Student loans may be discharged if you have a TPD. The Department of Education (Department) considers you to have a TPD if you are unable to work and earn money because of an injury or illness that is expected to continue indefinitely or result in death.

The following will help you navigate the discharge process:

  • The TPD process is complex and will take a significant amount of time; the time varies depending on the dates of disability and TPD application.
  • TPD applications must be reviewed first by the loan holder and guaranty agency. If approved by them, the Department then reviews the applications. You and your physician may be contacted at each level of the review.
  • The Department of Education’s TPD requirements are different from the disability eligibility requirements for Social Security, Veteran’s Affairs, or any other federal agency.
  • A doctor of medicine or osteopathy, authorized to practice in the United States, must describe and certify your TPD status on the TPD application form [see link below].
  • You must provide each loan holder with a separate TPD application with your original signature and the doctor’s signature. The doctor’s signature may be either an original or a photocopy, but may not be a stamp.
  • You will be asked to provide income verification through the I.R.S. for a period of at least three years following the date of disability.
  • If you receive final TPD approval, the Department should also review your eligibility for refund of payments made after the date of disability.

Additional Information About TPD:

Top
School closure

If you received a student loan at a school that closed before you completed your studies, you may be eligible for discharge of your loan. A federal student loan can be discharged for school closure if you were enrolled when the school closed and could not complete the program of study because of the closure. If you were on an approved leave of absence, you are considered to have been enrolled at the school. If the school closed within 90 days after you withdrew, you are also considered eligible for discharge.

Please bear in mind that you are not eligible for the discharge if you are completing a comparable educational program at another school. If you complete a comparable program of study at another school after your loan is discharged, you may have to pay back the amount of discharge. If you haven't received a diploma or certificate but have completed all of the coursework for the program, you are not eligible for the discharge.

Top
Ability to benefit

Your loan can be discharged if the school admitted you based on your ability to benefit from the training but you weren't properly tested to measure that ability or you failed the test. You may also be eligible for this type of discharge if you did not meet the physical or legal requirements of your state to enroll in the program or work in the career for which you were training, regardless of whether you had a high-school diploma or General Education Diploma (GED).

Student loans cannot be discharged because you feel your institution provided a poor education or had unqualified instructors or inadequate equipment. The U.S. Department of Education does not endorse the school's educational programs or guarantee that the school will deliver the services for which a student contracted. Therefore, this discharge cannot be granted if the school did not provide job placement or other services that it promised, or if you were not able to find a job in your field of study.

Top
Child and Family Services cancellation

According to federal law, a borrower is eligible to receive a child or family services cancellation if they are solely "providing or supervising the provision of services to high-risk children who are from low-income communities and the families of these children" (Section 674.56(b) of the Perkins regulation). You may also be providing these services to adults, but these services must be secondary to the services provided to high-risk children. To qualify for this cancellation, you must provide services only to high-risk children from low-income communities.

Top
Teacher Loan Forgiveness/Teacher Loan Cancellation
Federal Family Education Loan (FFEL)/Federal Direct Loan Teacher Loan Forgiveness

The Teacher Loan Forgiveness (TLF) Program is intended to encourage individuals to enter and continue in the teaching profession. Eligible applicants can receive loan forgiveness for up to a combined total of $5,000 of subsidized and unsubsidized Federal Family Education Loans (FFEL) or Federal Direct Loans.

The TLF Program is only available if you:

  • did not have an outstanding balance on an FFEL or Direct Loan on October 1, 1998, or on the date you obtained an FFEL or Direct Loan after October 1, 1998;
  • teach full-time at least five consecutive, complete school years as a full-time teacher in an elementary or secondary school designated as a low-income school;
  • are not in default on the loan for which you are requesting forgiveness;
  • have not received a benefit for the same teaching service through the AmeriCorps Program;
  • completed one of your five years of qualifying teaching service after the 1997-1998 academic year; and
  • took the loan for which you are requesting forgiveness before the end of your fifth year of qualifying teaching.

Highly qualified teachers, as defined by the No Child Left Behind Act, can qualify for an increased level of $17,500 in TLF if they have been a full-time teacher for five years.

Click here for the Teacher Loan Forgiveness Application form: Teacher Loan Forgiveness Application. For more detailed information about the eligibility requirements for teacher loan forgiveness, please visit the following website: http://studentaid.ed.gov/PORTALSWebApp/students/english/cancelstaff.jsp?tab=repaying.

Federal Perkins Loan Teacher Loan Cancellation

In order to be eligible for Federal Perkins Loan teaching cancellation, you must be teaching full-time at a low-income school, as determined by your State's education agency. The low-income designation is based on statistics gathered about the population of each elementary and secondary school in your State.

Top
Forged signature

If you believed that someone forged your signature on the loan application, promissory note, or authorization for electronic funds transfer, you may qualify for a loan discharge. You must provide five different samples of your signature, with at least two of the samples on documents that are clearly dated within a year before or after the date of the contested signature.

Top
School owes you a refund

You may also qualify for partial discharge of an FFEL or Direct Loan if your school failed to pay a tuition refund required under federal law. Only the amount of the unpaid refund will be discharged. You may qualify for this refund regardless of whether the school is closed or open.

Top
Death

On your death, your federal student loan debt will be discharged. Your estate will not owe any money on your loan.

Top
Loan Forgiveness for Public Service Employees

Through the College Cost Reduction and Access Act of 2007, Congress created the Loan Forgiveness for Public Service Employees Program.  The new program provides for the cancellation of the remaining balance due on eligible federal student loans after the borrower has made 120 monthly payments on those loans under certain repayment plans while employed in certain public service fields.  This fact sheet explains the provisions of the new program.

Effective Dates: Borrowers must have made 120 monthly payments after October 1, 2007 in the William D. Ford Federal Direct Loan (Direct Loan) Program. Therefore, the first cancellations of loan balances will not be granted until October 2017 at the earliest.

Eligible Loans: Any non-defaulted loan made under the Direct Loan Program.  See below for information on how borrowers of loans made under other federal student loan programs may qualify.  The Direct Loan Program includes the following types of loans –

  • Federal Direct Stafford/Ford Loans (Direct Subsidized Loans)
  • Federal Direct Unsubsidized Stafford/Ford Loans (Direct Unsubsidized Loans)
  • Federal Direct PLUS Loans (Direct PLUS Loans) – for parents and graduate/professional students
  • Federal Direct Consolidation Loans (Direct Consolidation Loans)

Eligibility of Other Federal Loans: Although loan cancellation is only available for loans made and repaid under the Direct Loan Program, borrowers with loans made under other federal student loan programs may be eligible if they consolidate those loans into the Direct Loan Program.  However, only payments made on the Direct Consolidation Loan will count toward the required 120 monthly payments.  Loans that are eligible for consolidation into the Direct Loan Program include –

  • Federal Family Education Loan (FFEL) Program, which includes:
    • FFEL Subsidized Stafford Loans
    • FFEL Unsubsidized Stafford Loans
    • FFEL PLUS Loans
    • FFEL Consolidation Loans (except FFEL joint spousal consolidation loans)
  • Federal Perkins Loans
  • Certain Health Professions and Nursing Loans

NOTE: Borrowers may have to meet additional eligibility requirements to consolidate these loans into a Direct Consolidation Loan.  If you are unsure about what kind of loans you have consult the National Student Loan Data System at http://nslds.ed.gov.

Eligibility Requirements – Repayment Plans: To be eligible to have remaining balances cancelled, the borrower must not be in default on the eligible loans and must –

  • Have made 120 monthly payments on the eligible loan(s) beginning after October 1, 2007.  Earlier payments do not count toward meeting this requirement.  Payments must have been made under any one or a combination of the following Direct Loan Program repayment plans –
    • Standard Repayment Plan with a 10-year repayment period.
    • Income Contingent Repayment (ICR) Plan – not available to parent Direct PLUS loan borrowers.
    • Income Based Repayment (IBR) Plan – not available to parent Direct PLUS loan borrowers.
    • Other Direct Loan repayment plans, but only payments that are at least equal to the amount that would be required under the 10-year Standard Repayment Plan may be counted toward the required 120 payments.

For more information about the repayment plans available in the Direct Loan program, please visit: www.ed.gov/DirectLoan on the web.

Eligibility Requirements – Employment in a Public Service Job: To be eligible to have remaining balances cancelled, the borrower must –

  • Have been employed in a public service job during the period in which the borrower made each of the 120 monthly payments and;
  • Must be employed in a public service job at the time of loan forgiveness.

NOTE:  In the case of a parent PLUS loan, the qualifying public service employee is the parent, not the student on whose behalf the loan was received.

Public Service Jobs: Eligible public service jobs are full-time jobs in the following fields:

  • Emergency management
  • Government
  • Military service
  • Public safety
  • Law enforcement
  • Public health
  • Public education (including early childhood education)
  • Social work in a public child or family service agency
  • Public child care
  • Public service for individuals with disabilities
  • Public interest law services (including prosecution or public defense or legal advocacy in low income communities at a nonprofit organization)
  • Public service for the elderly
  • Public library sciences
  • School-based library sciences and other school-based services
  • Certain tax-exempt organizations
  • Faculty teaching in high-needs areas, as determined by the Secretary
  • Full-time faculty member at a Tribal College or University

Additional Guidance and Implementing Regulations: The Department of Education will publish regulations to implement the Loan Forgiveness for Public Service Employees Program after providing an opportunity for public comment in accordance with legal requirements.  Those regulations will be issued by November 2008.

CAUTION:  In general, only borrowers who are making reduced monthly payments through the Direct Loan income-contingent or income-based repayment plans will have a remaining balance after making 120 payments on a loan.  In other words, only borrowers with a high debt-to-income ratio or consistently very low income will qualify for loan forgiveness under the Loan Forgiveness for Public Service Employees Program.

Disclaimer: This is a preliminary summary of the Loan Forgiveness for Public Service Employees Program based on the College Cost Reduction and Access Act of 2007. The information is subject to change and is not binding on the Department.

Top

Last updated/reviewed July 3, 2008

End of Page