There is over a trillion dollars outstanding in student loan debt in this country and seven million borrowers currently in default. What options are available for people struggling to repay their student loans?
Although student loans are usually not discharged in bankruptcy, depending on the circumstances and the type of loan, discharge and forgiveness are options for some borrowers absolving them of any further repayment obligation. A good student loan bankruptcy lawyer can best explain your options.
Under some unique circumstances, certain federal loans are dischargeable, canceling any further repayment obligation for eligible borrowers. You may qualify for student loan discharge if:
- You suffer a total and permanent disability. Total and permanent disability, or TPD, discharges are available for Direct, Perkins, and Federal Family Education loans in the event that a borrower becomes permanently and completely disabled so that he or she cannot participate in the work force.
- You die. Federal student loans will be discharged in the event that the borrower dies before the obligation is satisfied. Parents who took out Parent PLUS loans for a child may also have their loan discharged upon the death of the child.
- During a bankruptcy proceeding you can prove in court that continuing to repay your student loans would cause an undue hardship. Claimants must make a compelling showing of hardship, and in order to achieve discharge in bankruptcy a court must find that if you are forced to repay, you won’t be able to maintain a minimum standard of living, the hardship will continue for a significant portion of the repayment period, and you made a good faith effort to repay the loan before filing bankruptcy.”
- Misrepresentation. The school you took out the loan to attend misrepresented the benefit you would receive from attending, signed your name to a loan application without your authorization, certified that you would be eligible for employment in the field in which you were trained even though they were on notice of something that disqualified you, or failed to disburse a refund that was owed to you.
- You were the victim of identity theft.
Loan forgiveness programs have recently been significantly expanded. Once your loan is forgiven, you no longer have to pay the remaining balance. You may be eligible for loan forgiveness if:
- You are a teacher and a new borrower. If your balance is from after October 1998 and you’ve been teaching for five consecutive years in a low-income elementary school, secondary school, or educational service agency you could have as much as $17,500 of your outstanding balance forgiven.
- You are employed in an eligible public service position. If you have a qualifying public service position and have made payments on your federal loans for 10 years, you may be able to have the rest of your balance forgiven.
If you’re having trouble repaying your student loans, contact a student loan attorney to find out more about your options. Don’t wait to call, if you default on your loans before seeking help, some avenues of discharge or forgiveness may no longer be available to you.