Loan Discharge
A loan discharge is a release of your obligation to repay your loan, either in whole or in part. There are several circumstances under which your loan may be discharged:
Bankruptcy
The bankruptcy discharge is intended for certain borrowers who have filed a petition for relief under the Bankruptcy Code. Bankruptcy is a judicial action to halt the normal collection of debts against the petitioner, and cause those debts to be satisfied at the direction of the court. Generally, student loans may not be discharged due to bankruptcy. Call us to discuss what to expect during the bankruptcy proceedings.
Death
Stafford, Graduate PLUS, Parent PLUS, and Consolidation loans all have discharge provisions should you or a student for whom a parent obtained a Parent PLUS dies. Please make sure your family is aware of this discharge provision. By sending a certified copy of the death certificate, 100% of the loan balance will be discharged. We can help you during this difficult time, please call us.
False Certification
False Certification of Ability to Benefit
Unauthorized Signature/Unauthorized Payment
You qualify for a false certification loan discharge of the entire loan, in full or in part, if you or the student for whom a parent obtained a Parent PLUS received any part of the proceeds of a FFELP loan on or after January 1, 1986 to attend a school that did any one of the following:
- Admitted the student on the basis of his or her ability to benefit from its training, even though the student did not meet the applicable requirements for admission on the basis of ability to benefit
- Signed your name on the application and/or promissory note without your authorization
- Endorsed your name on the loan check or signed the authorization for electronic funds transfer (EFT) or master check without your authorization
You must submit a completed Loan Discharge Application.
School Closure
If you or a student for whom a parent obtained a Parent PLUS are unable to complete the program of study due to the closing of a school, you may qualify to have your loans discharged. An entire school or location must close for you to be eligible for loan discharge. You are not eligible for loan discharge if the program of study was terminated by the school but the school did not close at that time. You must submit a completed Loan Discharge Application: School Closure.
Total and Permanent Disability
If you are totally and permanently disabled, we must request that you provide a certification of the disability from a physician. We may request that your representative provide the physician’s certification if you are unable to do so. The certification must include the date you became unable to work and earn money because of an injury or illness that is expected to continue indefinitely or result in death. You or your representative must submit a completed Loan Discharge Application: Total and Permanent Disability or other form(s) approved by the United States Department of Education.
Unpaid Refund
If you were entitled to, but did not receive, refunds from your school you may be eligible to have your loan discharged, in full or in part. You must submit a completed Loan Discharge Application: Unpaid Refund and a sworn statement (notorization is not required), made under penalty of perjury, that declares the following:
- You or the student for whom a parent obtained a Parent PLUS received any part of the proceeds of the FFELP loan on or after January 1, 1986 to attend school
- You or the student for whom a parent obtained a PLUS within a time frame that entitled the borrower to a refund, withdrew from, was terminated from, or did not attend the school
- You or the student for whom a parent obtained a PLUS did not receive the benefit of a refund to which the borrower was entitled either from the school or from a third party, such as a holder of a performance bond or a tuition recovery program
Download the appropriate documents to help start the loan discharge process:
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