Under certain conditions, a federal education loan borrower may be relieved from further repayment obligations by having his or her federal education loans discharged. Discharge provisions are available under both the FFEL and Federal Direct Loan 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 repudiates the debt (e.g., fraud, identity theft, false certification or unpaid refund).
The main types of student loan discharge include:
Federal education 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 education loan or a private student loan. Federal education loans are not subject to these defenses; private student loans are. Statutes of limitation for private student loans also vary according to state.
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