If you’re dealing with overwhelming student debt, you may be looking to repayment alternatives to help you manage it. Although bankruptcy will rarely eliminate student loans, there are other programs available that provide some relief.
Two of those programs are loan forgiveness and cancellation. Which, if any, of these programs you qualify will depend on what kind of loan you have and specific circumstances. The programs discussed here apply to Direct Loans, Federal Family Education Loan (FFEL) Program Loans, and Perkins Loans
Total And Permanent Disability Discharge
All three types of loans may be discharged if you have been totally and permanently disabled. You must show that you have been permanently disabled by providing evidence of receipt of veteran’s or social security disability benefits or certification from a doctor of such disability. You can find in-depth information here.
Closed School Discharge
If your school closes while you are enrolled and you do not complete your program because of the closure, your federal student loans could be discharged (cancelled). Your loans could also be discharged if the school closed within 90 days of withdrawing. Your loan may not be discharged if the school has closed but you are completing your program at another school. You can read more here.
Teacher Loan Forgiveness
If you are a teacher and a new borrower and have been teaching full-time in a low income elementary or secondary or educational service agency for five consecutive years, you may be eligible to have up to $17,500 of your federal student loans forgiven. You can read more details about this program here.
Public Service Loan Forgiveness
If you are employed in certain public service jobs and have made 120 payments on your Direct Loans (after October 1, 2007), the remaining balance that you owe may be forgiven. You must not be in default on your loans. You can find more information here.
Perkins Loan Cancellation and Discharge
Federal Perkins Loan Program loans may be forgiven for certain types of public service or employment. For each year of service or employment, a certain percentage of your loan can be forgiven. You can get more information here.
Although bankruptcy generally won’t get rid of your student loans, either Chapter 7 or Chapter 13 bankruptcy may help you manage your other debt and help you get your student loans under control. If you’d like to talk with an experienced Colorado bankruptcy attorney about what your options are to deal with your student loan debt, we hope you’ll come in for a free, no-obligation consultation. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.