What is a Loan Cancellation & Discharge?

Every Student has the right to receive an education, there is funding available for all students. What happens when the loan is subject to cancellation and or discharge? According to the Title IV of the Higher education Act, your student loan can be cancelled under a number of circumstances. Let’s take a look at some of the reasons or causes that a loan can be cancelled or discharge. The first and foremost is death. In the event of the death of the borrower from a student whose parents have taken out a PLUS loan, then the obligation to repay the loan may be discharged. To qualify for a discharge of the debt due to death, you will need the original or certified copy of the death certificate. You cannot fax a copy the United States Department of Education will not accept copy.

Another reason for a loan cancellation is Total and Permanent Disability. Your physician must certify that you are permanently disabled and that you meet the requirements needed to qualify to total and permanent disability, once this is completed the student loan may be cancelled or discharged. A good reason for Loan Cancellation & Discharge is False Certification. If you have received a Direct Loan or a Federal Family Education Loan after 1986 you may qualify for False Certification if the loan was falsely certified by the school you are attending. The criteria for this discharge may stem from

• The School admitted you as a student based on their need for students and you did not meet the eligibility requirements but you were admitted anyway. • The College signed your name without your knowledge or authorization on the loan application or on any loan promissory note. • You are the victim of Identity Theft • You have a mental, physical or legal status from the time of your enrollment that would prohibit you from continuing your studies in your chosen field.

If you have taken out a Federal Perkins Direct Loan or a FFEL Loan and the school that you have been attending has closed down, the loan cancellation will apply. If the loan is discharged then you will not owe any more payments. Loan cancellation may require the remaining of the loan to be repaid back. On a lighter note, if you have decided to become a teacher under the Teacher Loan Forgiveness Program, they have the capacity for loan forgiveness of up to $ 17,500 for teachers who have chosen to teach in certain special areas. There is $ 5000 loan forgiveness for other teachers who have decided to teach in lowincome schools and other necessary requirements.