Student Loans: Other Types of Forgiveness, Cancellation, and Discharge
By: Charlestien Harris
Student loan forgiveness is a very hot topic these days. The October 31 Public Sector Loan Forgiveness Program (PSLF) submission deadline is fast approaching, so submit your application as soon as possible. If you do not qualify for the special waiver program, you should evaluate your eligibility for other loan waiver options.
Here are a few alternative programs you can explore.
Teacher Loan Forgiveness is available for Federal Family Education Loans (FFEL) direct loans and program loans. If you teach five full and consecutive full-time school years at a low-income elementary school, high school, or educational services agency, you may be eligible for forgiveness of up to $17,500 on your direct or FFEL loans. Previously, you could not have received a benefit for the same qualifying payments or service for teacher loan forgiveness and government loan forgiveness at the same time. However, the limited PSLF waiver temporarily removes this restriction for people who have previously received a teacher loan waiver.
Dismissal from the closed school is available for direct loans, FFEL program loans and Perkins loans. The Biden administration has forgiven student loan debt for borrowers who attended a handful of for-profit colleges. It also settled a class action lawsuit that automatically authorizes 200,000 borrower defense claims against another 155 for-profit colleges. If your school closed while you were enrolled or shortly after you retired, you may be eligible for your federal student loan redemption. There are certain admissions requirements to qualify for a closed school discharge; You must request that your loan obligation be waived.
For more information, see www.studentaid.gov/manage-loans/forgiveness-cancellation/closed-school.
Also see www.bestcolleges.com/news/for-profit-college-student-loan-forgiveness-list/ for a list of closed schools eligible for loan relief.
Perkins Loan Cancellation and Relief is only available for Perkins federal loans. You may be eligible to have all or part of your Perkins loan canceled (due to your employment or volunteer service) or released (under certain conditions). This contains Cancellation of the Perkins Loan Teacher. You may be eligible for cancellation of up to 100% of a Federal Perkins Loan if you worked full-time in a public or non-profit elementary or secondary school system as:
- Teacher at a school for students from low-income families
- Special education teachers, including teachers of infants, toddlers, children or young people with disabilities
- Teachers in math, science, foreign language, or bilingual education, or any other subject identified by a state board of education as having a shortage of qualified teachers in that state
A teacher’s cancellation authority is based on the duties outlined in an official job description, not the job title. To receive a cancellation you must be employed directly by the school system. There are no plans to cancel Federal Perkins Loans for post-secondary education. For more information, see www.studentaid.gov/manage-loans/forgiveness-cancellation/perkins.
Total and Permanent Disability (TPD) Dismissal is available for direct loans, FFEL program loans and Perkins loans. If you are completely and permanently disabled, you may be eligible for an exemption from your federal student loans. You can prove that you qualify for a TPD discharge by providing documentation from one of three sources:
- the US Department of Veterans Affairs (VA)
- the Social Security Administration (SSA)
- a physicist
Visit wwwstudentaid.gov/manage-loans/forgiveness-cancellation/disability-discharge for more information.
discharge due to death is available for direct loans, FFEL program loans and Perkins loans. Federal student loans are redeemed upon the death of the borrower or the student on whose account a PLUS loan was taken out. If you die, your federal student loans will be paid off upon submission of the required proof of death. For more information, see www.studentaid.gov/manage-loans/forgiveness-cancellation/death.
Parent borrowers also have options. A Parent PLUS loan can be paid off if you die, if you (not the student on whose behalf you received the loan) become completely and permanently disabled, or if your loan is paid off in bankruptcy (which is rare). Your Eltern-PLUS loan can also be repaid if the child for whom you took out the loan dies. In addition, a parent PLUS Loan may be repaid in whole or in part under the following circumstances:
- The student you borrowed for was unable to complete their program because the school was closed
- Your eligibility to receive the loan was falsely certified by the school
- Your eligibility to receive the loan was falsely verified by identity theft
- The student withdrew from the school, but the school did not issue you a refund of your loan amount, which it was required to pay under applicable laws and regulations
Applying for student loan forgiveness programs can seem like a complicated process, but it doesn’t have to be. With a little effort and research, you can learn to navigate the resources available and gather the information you need to qualify for one of the student loan forgiveness programs.
For more information on this and other financial topics, email me at [email protected] or call me at 662-624-5776.
See you next week – stay financially fit!
Charlestien Harris is a financial contributor to DeSoto County News. She is a finance expert at Southern Bancorp Community Partners, whose articles have been featured in a number of publications in the region. You will see her columns weekly on the DeSoto County News website and our social media channels.