Even before the Pandemic, many people have come to find themselves in circumstances that significantly affect their ability to repay student loans. Medical bills, job loss, and disability are just some of the factors that can make repayment a hardship or even impossible. When events occur that have a long-term effect on your ability to repay student loans, you may have options to qualify for forgiveness, cancellation, and discharge of your loan payments.
What are the Differences Between Forgiveness, Cancellation, and Discharge?
Whether you can receive forgiveness, cancellation, or a discharge of your loan payments depends on if you qualify based on your circumstances. Generally, the inability to make payments because of a change to employment status is forgiveness, a permanent disability that affects your ability to work is usually classified as a discharge.
Service and Active Employment-based Forgiveness
Besides financial circumstances that prohibit your ability to make payments, you may also qualify for forgiveness based on active employment and volunteer service. For example, some types of government or non-profit employment positions can be eligible for loan forgiveness. Under the Public Service Loan Forgiveness (PSLF) Program, the remaining balance on your Direct Loans could be forgiven after 120 qualifying monthly payments have been made while working full-time for a qualifying employer. There are also forgiveness plans specifically for teachers and discharge if the school you attended has closed. For more information on general loan forgiveness options, please click here.
Total and Permanent Disability Discharge
If you live with a disability, you may also qualify for one of the loan forgiveness options. A total and permanent disability (TPD) discharge relieves you from having to repay a William D. Ford Federal Direct Loan (Direct Loan) Program loan, a Federal Family Education Loan (FFEL) Program loan, and/or a Federal Perkins Loan or to complete a TEACH Grant service obligation. This type of forgiveness requires a unique application and specific documentation outlining your diagnosis of a disability. There are also stipulations to provide support information from the Veterans Association (if applicable), Social Security Administration, and your physician. To learn more about disability loan forgiveness, please click here.
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