Having a large amount of student loan debt can weigh heavily on you. The payments are huge and unaffordable, and you don't think you will ever be able to pay them off in your lifetime. You just wish they would go away.
Well, although there is no magic wand in the law that will just allow you to do that, it will work in certain circumstances with certain loans. So the question becomes, how do you get your student loans forgiven? What loans do you have to have and under what circumstances?
Federal Student Loan Discharge
The great thing about having a student loan from the U.S. Department of Education is that there are many ways you can get them to wipe them out through what is called an Administrative Discharge. But these discharges are only given out under certain circumstances. They are:
- Permanent and total disability
- Closure of the school before you completed the program
- The false certification of you for the educational program the loans paid for
- Unpaid refunds by the school
- Death (yours or of your child if it is a Parent PLUS loan)
This last may seem a bit severe, but the tragedy of losing a child should not be followed by the continued financial burden of the student loan.
Also, if you dropped out of some classes before the deadline to do so, and the school did not refund to you the cost of those classes paid for by the loan, you can get that portion discharged.
Finally, although it is not a discharge, an income driven repayment plan for a federal loan can be the equivalent if the loan balances are so high, and your income is so low, that the monthly payment is effectively $0.00. This is worth looking into as well.
New Jersey CLASS Loan Discharge (HESAA)
Have loans other than federal ones that you are struggling to pay? Well, if you took out a New Jersey CLASS student loan, administered by HESAA, then you have some possibilities as well! HESAA will discharge a loan due to the total disability, or death, of the borrower.
HESAA also offers income based repayment and has been very reasonable lately in agreements for payment amounts that are affordable. If you don't qualify for a discharge, this is worth looking into.
Discharging Student Loans in Bankruptcy
Then there is bankruptcy. If you have a significant amount of debt aside from student loans (such as credit cards, medical bills, personal loans), it may make sense to file bankruptcy to get rid of that debt and, maybe, discharge the student loans as well.
However, it is not easy or inexpensive to seek student loan discharge this way. The burden of proof is high, and the government opposes it aggressively. But if the loan balance is high enough to warrant the expense,
So What Do I Do?
As you can see, there are different options available depending on the type of loan and your circumstances. It isn't easy to figure out what solution is right for you. But if you live in New Jersey and would like to consult with me on your loans, please feel free to call my office at 856-432-4113 or contact me through this site to schedule an appointment o discuss your case. Put my experience to work for you!
If you would like more information about student loans, you can dowload my free books, I Graduated; Now What? A Guide to Dealing with Your Student Loans and Paying for Your Classes with a CLASS Loan: A Survival Guide to HESAA.
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