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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:

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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.

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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.

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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.

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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.

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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.

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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.

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Death

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

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Loan Forgiveness for Public Service Employees

What is the Public Service Loan Forgiveness Program?

Through the College Cost Reduction and Access Act of 2007, Congress created the Public Service Loan Forgiveness Program to encourage individuals to enter into and continue to work full-time in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance due on their eligible federal student loans after they have made 120 payments on those loans under certain repayment plans while employed full-time by certain public service employers. Since borrowers must make 120 monthly payments on their eligible federal student loans beginning after October 1, 2007 before they qualify for the loan forgiveness, the first cancellations of loan balances will not be granted until October 2017.

What federal student loans are eligible for forgiveness under the Public Service Loan Forgiveness Program?

Any non-defaulted loan made under the William D. Ford Federal Direct Loan Program (Direct Loan Program) is eligible for loan forgiveness. (See below for information on how non-Direct Loans may be eligible.) 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 or professional students; and
  • Federal Direct Consolidation Loans (Direct Consolidation Loans)

How can other federal student loans qualify for loan forgiveness?

Although loan forgiveness under this program is available only for loans made and repaid under the Direct Loan Program, loans made under other federal student loan programs may qualify for forgiveness if they are consolidated into a Direct Consolidation Loan. However, only payments made on the Direct Consolidation Loan will count toward the required 120 monthly payments.

The following types of loans may be consolidated into the Direct Loan Program:

  • Federal Family Education Loan (FFEL) Program loans, which include –
    • Subsidized Stafford Loans;
    • Unsubsidized Stafford Loans;
    • Federal PLUS Loans – for parents and graduate or professional students;
    • Federal Consolidation Loans (excluding joint spousal consolidation loans);
    • Federal Perkins Loans; and
    • Certain Health Professions and Nursing Loans

NOTE: To consolidate a Federal Perkins Loan or Health Professions/Nursing Loan into the Direct Loan Program, you must also consolidate at least one FFEL Program loan or Direct Loan. If you are unsure about what kind of loans you have, you can find information about your federal student loans in the U.S. Department of Education’s National Student Loan Data System at http://nslds.ed.gov.

What are the borrower eligibility requirements for loan forgiveness under the Public Service Loan Forgiveness Program?

  • The borrower must not be in default on the loans for which forgiveness is requested;
  • The borrower must be employed full-time by a public service organization-
    • When making the required 120 monthly loan payments (certain repayment conditions apply – see below);
    • At the time the borrower applies for loan forgiveness; and
    • At the time the remaining balance on the borrower’s eligible loans is forgiven.

What are the specific loan repayment requirements for loan forgiveness under this program?

  • The borrower must have made 120 separate monthly payments beginning after October 1, 2007 on the Direct Loan Program loans for which forgiveness is requested. Earlier payments do not count toward meeting this requirement. Each of the 120 monthly payments must be made for the full scheduled installment amount within 15 days of the due date;
  • The 120 required payments must be made under one or more of the following Direct Loan Program repayment plans –
    • Income Based Repayment (IBR) Plan (not available to parent Direct PLUS Loan borrowers).
    • Income Contingent Repayment Plan (not available to parent Direct PLUS Loan borrowers).
    • Standard Repayment Plan with a 10-year repayment period.
    • Any other Direct Loan Program repayment plan, but only payments that are at least equal to the monthly payment amount that would have been required under the Standard Repayment Plan with a 10-year repayment period 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.

IMPORTANT NOTE: The Public Service Loan Forgiveness Program provides for forgiveness of the remaining balance of a borrower’s eligible loans after the borrower has made 120 payments on those loans. 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.

What types of public service jobs will qualify a borrower for loan forgiveness under this program?

The borrower must be employed full-time (in any position) by a public service organization, or must be serving in a full-time AmeriCorps or Peace Corps position. For purposes of the Public Service Loan Forgiveness Program, the term “public service organization” means:

  • A Federal, State, local, or Tribal government organization, agency, or entity (this includes most public schools, colleges and universities);
  • A public child or family service agency;
  • A non-profit organization under section 501(c)(3) of the Internal Revenue Code that is exempt from taxation under section 501(a) of the Internal Revenue Code (this includes most not-for-profit private schools, colleges, and universities);
  • A Tribal college or university; or
  • A private organization that is not a for-profit business, a labor union, a partisan political organization, or an organization engaged in religious activities (unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing) and that provides the following public services-
    • Emergency management;
    • Military service;
    • Public safety;
    • Law enforcement; and
    • Public interest law services;
    • Early childhood education (including licensed or regulated health care, Head Start, and State funded pre-kindergarten);
    • Public service for individuals with disabilities and the elderly;
    • Public health (including nurses, nurse practioners, nurses in a clinical setting, and full-time professionals engaged in health care practioner occupations and health care support occupations);
    • Public education;
    • Public library services; and
    • School library or other school-based services.

NOTE: To qualify for forgiveness of a parent PLUS loan the parent borrower, not the student on whose behalf the loan was obtained, must be employed by a public service organization.

Where can I find additional information?

This is only a summary of the basic requirements of the Public Service Loan Forgiveness Program. For more detailed information, refer to the final regulations for this program (34 C.F.R. 685.219) that the U.S. Department of Education issued on October 23, 2008. You may view the final regulations by linking to http://www.ed.gov/legislation/FedRegister/finrule/2008-4/102308a.html.

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Last updated/reviewed March 5, 2009

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