Under certain conditions, a federal student loan borrower may be relieved from further repayment obligations by having their federal student loans discharged. Discharge provisions are available under both the Direct Loan and FFEL programs.
Loan discharge differs from forgiveness. While both involve the cancellation of debt, forgiveness is generally provided in exchange for service in a particular occupation (especially a high-need area) or for giving back to the community in other ways. Loan discharge generally occurs in situations where the borrower can’t repay the debt (e.g., death, disability, and bankruptcy) or rejects the debt (e.g., fraud, identity theft, false certification, or unpaid refund).
The main types of student loan discharge include:
- Death Discharge
- Total and Permanent Disability Discharge
- Bankruptcy Discharge
- Closed School Discharge
- False Certification Discharge
- Student Eligibility / Ability to Benefit
- Disqualifying Status
- Unauthorized Signature
- Unauthorized Payment
- Identity Theft
- Unpaid Refund Discharge
- Discharge for Spouses and Parents of 9/11 Victims and Public Servants
- Discharge for Federal Perkins Loans
Federal student loans are not eligible for discharge solely because the borrower feels that the school provided an inferior quality education or because the student was unable to get a job after graduation.
Whether a student loan is subject to statutes of limitation, the defense of infancy, and the defense of laches depends on whether the loan is a federal student loan or a private student loan. Federal student loans are not subject to these defenses; private student loans are. Statutes of limitation for private student loans also vary according to state.