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What Is the Difference Between Student Loan Discharge and Forgiveness?

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If you can’t make your student loan payments, you’re not alone. Millions of people are behind on their loans or have defaulted on them, and the numbers continue to increase as college costs rise and outstanding student debt grows. As of the end of 2018, student debt nationwide was at an astronomical $1.46 trillion, according to the Federal Reserve Bank of New York.

Student debt in Ohio alone is in the tens of billions and statistics show that the default rate in the state on student loans is higher than the national average. There is some positive news. If you qualify, you may be able to erase your debt through student loan discharge or student loan forgiveness.

An experienced student loan attorney can answer your questions and help you understand whether your loan might be eligible for either discharge or forgiveness. Our skilled attorneys at Luftman, Heck & Associates are committed to helping debtors out of difficult financial situations. Contact us at online contact form or use our online contact form for a free consultation about your case.

What is the Difference Between Discharge and Forgiveness?

Both student loan discharge and student loan forgiveness relieve borrowers of loan repayment obligations, but they have very different eligibility requirements.

Discharge may be granted for people who have suffered often dire personal circumstances, including disability or identify theft, as examples, that cause them grave financial distress. Forgiveness is an option for some people who work in qualifying public service careers as a sort of “reward” for choosing a career that benefits the community.

Following is a more detailed explanation of both student loan discharge and student loan forgiveness.

Student Loan Discharge

Student loan discharge is available for different types of federal loans including Federal Family Education Loans (FFEL), Federal Direct Loans, Perkins Loans, and Parent Plus Loans.

Here are circumstances when your student loan might be discharged:

  • Death – If you die before paying off your student loan, it is eligible for discharge. If your parents had a Parent Plus Loan, that loan is eligible for discharge as well.
  • Total and permanent disability — If you are unable to work because of permanent and complete disability, your loan may be discharged.
  • Identity theft — If someone has stolen your identify and taken out a student loan in your name, you are eligible to have it discharged.
  • Fraudulent misrepresentation — If your school has fraudulently signed your name to a loan application, failed to let you know about reimbursement money you were owed, or misled you about the benefits of attending the school or about your chosen career eligibility following graduation, your loan might qualify for discharge.

In some instances, the bankruptcy court will discharge your federal or even private student loan if you can prove that you’re experiencing undue financial hardship, and that you had made an honest attempt to pay the loan back. Discharge through bankruptcy can be very difficult, but it isn’t impossible. It can be wise to speak to a bankruptcy attorney to find out if you might be a candidate for discharge through bankruptcy

Student Loan Forgiveness

Borrowers who have worked full-time in certain civil service, healthcare, and education positions for a specified period of time may be able to qualify for student loan forgiveness programs. Some examples of qualifying careers include teacher, firefighter, police officer, social worker, nurse, doctor, and others. There are different programs that offer forgiveness to people in specific careers or even in volunteer positions. They include the following examples:

  • Public Service Loan Forgiveness — Generally, to qualify, you must have worked in a public service position for 10 years and made your student loan payment for the previous 120 months.
  • Teacher Loan Forgiveness — You must have taught in a qualifying school for 5 years and fulfilled other requirements to potentially have up to $17,500 of debt forgiven.

Experienced Northern Ohio Student Loan Attorneys

If you’re late paying your loans or if they are in default, your future can be comprised, so it’s important to get help now. The experienced attorneys at Luftman, Heck & Associates in Cleveland can guide you through your options for managing your student debt based on your individual situation and the type of loan you have. Then they can work with you to potentially reduce or relieve your debt. Reach out to our student loan attorneys at online contact form or use our online contact form to schedule a free consultation.