Opportunities to Cancel Your Student Loans
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UPDATED: Dec 19, 2011
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Given the public’s recent and growing denunciation of student loan debt, it’s important to note that some borrowers may be eligible to have their loan balance completely or partially discharged. The government offers many different debt cancellation opportunities based on necessity, fairness, or sensitivity to certain (often unforeseeable) circumstances.
The programs apply to one, multiple, or all of the following types of student loans: Direct subsidized or unsubsidized, Federal Stafford, Perkins, Direct and Federal PLUS loans for graduate students, Direct and Federal Plus loans for parents, and Direct and Federal Consolidation loans.
The government recognizes that some situations are beyond borrowers’ control. As a result, specific programs have been established to protect disabled, deceased, and victimized student loan borrowers. From victims of natural disasters or unforseen illnesses to fraud, there may be students out there who don’t know they can have some or all of their debt discharded.
- 9/11 Victims
Survivors of victims of 9/11 may have outstanding student loan balance discharged. Documentation of presence at the 9/11 attacks must be provided and proof of death or permanent disability may be required.
- Closed School
Borrowers can have their student loan debt cancelled if the school they attended for higher education closed before they completed their education. The incompletion of education must be a result of the school’s closure, and borrowers are only eligible for debt forgiveness if they are unable to transfer their acquired credits to another institution.
If a student for whom student loans have been taken out for dies, then the entirety of the debt will be forgiven if a valid death certificate is provided to the lender.
If a borrower becomes totally and permanently disabled, their student loan debt may become cancelled depending on the types of loans taken out.
- False Certification by School
A borrower’s student loan debt will be cancelled if their school falsely certified their eligibility for obtaining education financing. In order to qualify for this debt cancellation, the school must have certified the borrower for a student loan when the borrower didn’t meet that school’s admission standards, had a condition that prevented him or her from becoming employed based on legal requirements, or never signed his or her name on the an application or loan check, and never received the proceeds from that falsified loan.
Employment based programs
Some debt cancellation opportunities are given to individuals who decide to undertake certain jobs that benefit less fortunate communities or the public as a whole. All of these debt cancellation opportunities are geared towards service-oriented careers, and must be held by individuals on a full time basis for an extended period of time. Some are only available when federal funds permit, so it’s important that borrowers do further research and get a professional financial planner’s insight on any of these that may apply to their personal situation.
- Early Intervention Services for the Disabled
Borrowers who work full-time as qualified professionals providing early intervention services for the disabled may be eligible for forgiveness.
- Fire Fighters
Loan debt can be cancelled if a student serves full time as a fire fighter. This form of debt forgiveness is sponsored by the International Association of Fire Fighters.
- Head Start Program
Full-time staff members of the Head Start Program can qualify for a 15 percent principal reduction for each year they’re employed.
The Head Start Program is a government-supported program designed to grant educational opportunity to economically disadvantaged families. More information can be found on the Office of Head Start’s website.
- Law Enforcement
Debt can be cancelled if a student serves full time as a law enforcement or corrections officer. To be eligible for this cancellation, a student’s school must have proof that the borrowers employer is publically funded and that the student is a sworn employee whose responsibilities pertain to the criminal justice system.
- Legal Assistance Attorney
If a student is employed full time as an attorney with a nonprofit organization that helps low-income individuals pro bono or provides legal assistance through an organization that falls under certain sections of the law, their student debt may be forgiven.
Any librarian who has a master’s in library science and who is employed at a public library, an elementary, or secondary school that’s eligible for assistance under the Elementary and Secondary Education Act of 1965.
- Military Service
Up to 50 percent of student loan debt can be cancelled for students who were on full-time active duty in certain qualifying areas. Areas that qualify are those where soldiers faced imminent danger and hostilities.
- Nurses and Technicians
Cancellation can be obtained by those who work full time as a nurse or medical technician.
- Peace Corps or Vista Volunteer
A student can be relieved of between 15 and 20 percent of their student loan debt depending on how long they serve as a Peace Corp or Vista volunteer.
- Public Services Employees
After 10 years consistent monthly payments on loans taken out on or after October 1, 2007 by full-time public service workers, all remaining student loan debt will be forgiven. The public service job must be approved, and the loans held by the borrower cannot be in default.
- Service in Places of Need
Providing full-time service in certain areas of national need can lead to debt cancellation. This form of debt forgiveness is available only if federal funds permit, and carries specific guidelines for each profession eligible.
- Speech-Language Pathologist
If a student has a master’s degree and works as a full-time speech-language pathologist with a school that falls under Title I of the Elementary and Secondary Education Act of 1965, their debt may be forgiven.
Teachers can receive partial to full student loan forgiveness if they are employed with approved schools and meet certain criteria.
For further information on these debt cancelling opportunities, visit Mappingyourfuture.org. In the event borrowers fall under any of these categories for debt forgiveness, they should contact their financial advisor or lender for more information on the exact prerequisites for qualifying.