All loans received under programs authorized by Title IV, of the Higher Education Act can be canceled for several different circumstances including: (1) in the event of your death; or (2) if you become totally and permanently disabled after the loan is disbursed. In addition, some loan types may qualify for loan discharge under a variety of conditions.
Some of the most common cancellation provisions are
listed for you below:
Also please visit our
Discharges section of our main FSA site for additional information on loan cancellation and discharges.
In the event of the borrower's death, or on or after July 23, 1992 the death of the student for whom a parent received a PLUS loan, the obligation of the borrower and any endorser to make any further payments on the loan is discharged.
To verify a borrower's death, the servicing agency must have
the original, certified copy, or clear, accurate, and complete
photocopy of the original or certified death certificate. The
U.S. Department of Education cannot accept a faxed copy.
Total and Permanent Disability |
|
If a physician (doctor of medicine or osteopathy) certified that you are totally
and permanently disabled and you meet certain other requirements
during a 3 year conditional discharge period your loan(s) may be
discharged.
You may request a "Loan Discharge Application: Total and Permanent Disability" from our forms request page.
If you received a Direct Loan or a Federal Family Education
Loan (FFEL) Program Loan on or after January 1, 1986, you may
qualify for a False Certification discharge if you (or the
student for whom a parent received a PLUS loan) received a loan
that was falsely certified by an eligible school. Your
eligibility to borrow is considered to have been falsely
certified if the school--
- Admitted you on the basis of ability to benefit from its
training and you did not meet the applicable requirements
for admission on the basis of ability to benefit; or
- Signed your name without your authorization on the loan application or promissory note;
or
- You have a physical, mental, or legal status or
condition at the time of enrollment that would legally bar
employment in your field of study.
- You are the victim of identity theft.
In order to permit a student to borrow a Federal Direct Loan
or FFEL Program Loan, schools are required to certify that
student borrowers who lack a high school diploma or GED have the
ability to benefit from the training offered by the institution.
False certification of a student borrower's eligibility
occurs, for example, if the school failed to test such a
student's ability to benefit or conducted testing in an improper
manner. Schools may satisfy the ability to benefit requirements,
for example, by testing students or offering courses in remedial
education.
Misrepresentations, by the school, on the other hand,
regarding the school's educational program or its financial or
administrative capability, including the school's placement
services or the quality of the school's facilities, faculty, or
equipment are not part of the process of "certification" of the
student's eligibility to borrow and do not entitle the borrower
to False Certification loan discharge.
If your loan is discharged, you will not owe any more
payments on the loan, and you will get a refund of payments you
have made in the past. Also, if the loan is discharged, the
servicing agency will tell credit reporting agencies that the
loan was discharged, and any adverse credit history resulting
from nonpayment of the discharged loan will be deleted. In
addition, your discharged loan will not prevent you from
applying for federal student financial aid.
You may request a "Loan Discharge Application: False
Certification of Ability to Benefit , Loan Discharge
Application: False Certification (Disqualifying Status), Loan
Discharge Application: Unauthorized Signature/Unauthorized
Payment", or "Loan Discharge Application: False Certification
(Identity Theft)" by clicking here or by
contacting us.
If you received a Federal Perkins Loan Direct Loan or FFEL
Program Loan on or after January 1, 1986, you may qualify for a
Closed School discharge if you (or the student for whom a parent
received a PLUS loan) could not complete the program of study
for which the loan was intended because the school at which you
(or student) were enrolled, closed while you were in attendance,
or you (or student) withdrew from the school, or were on an
approved leave of absence, not more than 90 days prior to the
date the school closed. You must not have completed the program
of study through a teach-out at another school or by
transferring academic credits or hours earned at the closed
school to another school.
If your loan is discharged, you will not owe any more
payments on the loan, and you will get a refund of payments you
made in the past. Also, if the loan is discharged, the servicing
agency will tell credit reporting agencies that the loan was
discharged, and any adverse credit history resulting from
nonpayment of the discharged loan will be deleted. In addition,
your discharged loan will not prevent you from applying for
additional federal student financial aid.
If you believe that a school you attended may have closed,
you may be able to use the Closed School Database
to confirm this and to determine the date the school closed.
Please note that the closed school list includes only schools
that at one time participated in the federal student aid
programs administered by the U.S. Department of Education. A
closed school that never participated in the programs
administered by the Department will not be on this database.
Please visit our
Closed School Information section for more information on
this topic.
You may request an "Loan Discharge Application: School
Closure" by clicking here or by
contacting us to request an application.
The Teacher Loan Forgiveness Program grants loan forgiveness of
up to $17,500 for teachers in certain specialties and up to
$5,000 for other teachers, who teach for five years in certain
low-income schools and meet other requirements. This forgiveness
benefit is available to Direct Loan and Federal Family Education
Loan (FFEL) program borrowers who did not have an outstanding
balance on a Direct Loan of FFEL Program loan on October 1,
1998, or on the date they obtained a Direct Loan of FFEL program
loan after October 1, 1998.
If you received a Perkins Loan or a National Direct Student Loan, you may qualify for the teacher loan cancellation.
Please visit the
Cancellation/Deferment Options for Teachers Home Page for
additional information.
Recipients of a National Defense Student Loan may receive
partial cancellation of their loan for their service in the
United States Armed Forces if the loan was disbursed after April
13, 1970 and full-time active service began after June 30, 1970.
Recipients of a National Direct Student Loan and Perkins Loan
may receive partial cancellation of their loan for their service
in the United States Armed Forces if his/her military service
was for a full year in a hostile area.
If you believe that you may qualify for cancellation of your
loan(s) due to your military service as described above, you
should send a copy of your DD214 (discharge form) and letter of
explanation to the agency servicing your loan.
Effective October 8, 1998, your obligation to repay Title IV,
HEA student loan and grant liabilities can no longer be canceled
(discharged) due to bankruptcy, unless you can successfully
prove that repayment of the debt would cause "undue hardship" as
defined by case law in your jurisdiction. Previously, student
loan and grant liabilities could only be canceled (discharged)
due to bankruptcy under certain conditions which, in general,
depended on the amount of time between the date on which a loan
or grant liability was due or the date that the bankruptcy
was filed, as well as undue hardship.
Effective May 28, 1991 and prior to October 8, 1998, a loan
or grant liability was discharged by entry of a general
discharge order if the first payment came due on the debt at
least 7 years before the bankruptcy was filed. Prior to 1991
amendments, only five years was required. Any grace periods,
forbearance, or deferment must be subtracted from the time
elapsed between the first payment due date and the filing date
when calculating time in repayment. Debts outstanding for less
than the required seven year period could be discharged only if
the court made an express finding that the repayment of the debt
would place an "undue hardship" on the borrower. These
non-dischargeability requirements apply to educational loans
received by both student borrowers and by parent borrowers, and
apply to loans received by any kind of borrower to pay off prior
loans (Consolidation Loans). Dischargeability of these types of
debts is governed by 11 U.S.C. 523 (a)(8). In order to determine
the dischargeability of a loan, the servicing agency needs the
following three pieces of information from you or your attorney:
- Notice of First Meeting of Creditors;
- List of Creditors (Schedule A-3); and
- the Final Discharge Order
Please call us 1-800-621-3115 for additional information on any of the information on this page.
|