There are several specific instances in which your student loan may be canceled or discharged. These are as follows:
You may be eligible for a TPD Discharge on your federal student loans if you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that:
Download, fill out and return the Total and Permanent Disability Form to FAMS begin the process.
Once receives the disability discharge application, they will review the information on the discharge application and determine if discharge is applicable for a given borrower. can either deny or approve any given discharge application.
will send out a letter to you explaining that your request for discharge was denied, stating the reason for the denial.
Reasons can vary for denial from not being dated by the physician or the borrower, to disability does not substantiate a discharge.
will send out a letter to the borrower explaining that discharge request passed initial review by and that loans will be forwarded to Department of Education for further review and monitoring.
Once the U.S. Department of Education receives the disability discharge application, they will review the application and determine if the documents submitted justify a full discharge.
Once the loans have been discharged, a three year post discharge monitoring period begins. The borrower will need to keep communications with Department of Education for the 3 year period to insure that nothing changes with discharge. At any time, at the discretion of the Department, loans can be reinstated for collection of the balance if changes occur.
If the borrower is deceased, the federal student loan may be discharged. In the case of a Parent PLUS loan, the loan may be discharged if the responsible party or the student is deceased. Please fill out the Deceased Notification Form with as much information on the account as possible. You can also use this form to upload the death certificate of the deceased. If the death certificate is not available, you can provide the city, state, and the last name of the deceased at time of death.
If the school closed while you were attending, you may be able to have your student loans discharged. Download, fill out and return the School Closure Form to begin the process. If you have any questions, Contact FAMS for assistance. back to top
This is not an automatic process; you must prove to the bankruptcy court that repaying your student loan would cause undue hardship.
If you file Chapter 7 or Chapter 13 bankruptcy, you may have your loan discharged in bankruptcy only if the bankruptcy court finds that repayment would impose undue hardship on you and your dependents. This must be decided in an adversary proceeding in bankruptcy court. Your creditors may be present to challenge the request. The court uses this three-part test to determine hardship:
You may be eligible for a discharge of your FFEL Program loan in these circumstances:
You may be eligible for a discharge of your FFEL Program loan if you withdrew from school, but the school did not pay a refund that it owed to , as appropriate.
Only the amount of the unpaid refund will be discharged. You may qualify for this partial discharge whether the school is closed or open. Contact FAMS for more information.
After reviewing the conditions, download and fill out the appropriate forms. You can return them using the Discharge and Dispute Document Upload Form or by Fax or Mail
Certain types of cancellations are available to military personnel, teachers, nurses, child care providers, or borrowers affected by the closure of a school. Provisions differ depending on the type of loan you have.
Yes. Until you hear whether your discharge has been approved, you should continue making payments on your loan to prevent it from going into default or accruing (accumulating) additional interest. However, note the following:
If you have a Direct Subsidized Loan, Direct Unsubsidized Loan, Federal Subsidized Stafford Loan, or Federal Unsubsidized Stafford Loan, you can be granted forbearance. Your loan servicer should grant forbearance until a decision is made on your application. If forbearance is granted, no one is permitted to collect on your loan until it is determined whether you are eligible for a loan discharge.
If you qualify for a complete discharge of your loan, you are no longer obligated to make loan payments. Depending on the type of loan discharge program for which you may be eligible, may be required to refund to you some or all of the payments you made on the loan. In addition, any adverse credit record related to a default might be deleted, and no tax refund offset or wage garnishment will take place to collect on the discharged loan. If the loan was in default, the discharge may erase the default status. If you have no other defaulted loans, you regain eligibility for federal student aid. Note: In some cases, your school might be required to refund a portion of the FFEL Program loan to (for example, you withdrew from school within a time frame that required a refund of loan funds). If your school fails to make that refund, that portion of your loan will be canceled, but you will be responsible for paying any remaining amount. back to top
For most discharges, the final decision on whether to discharge the loan cannot be appealed. The two exceptions are false certification and forged signature discharges. If you receive these types of discharges, you may ask to review the denial. If your loan discharge is denied, you remain responsible for repaying the loan. Talk to your loan servicer about repayment options if you have a FFEL Program loan. back to top
Yes. The fact that you didn't fully understand the implications of getting a loan, or the fact that it's been many years since you signed for the loan, does not mean that you do not have to pay. back to top
You must repay your parent PLUS loan even if the student doesn't complete his or her education or can't find a job related to the program of study, or if you or the student is unhappy with the education. However, the loan may be discharged if the child for whom you borrowed dies, or if you die or become totally and permanently disabled.
We may discharge some or all of your loan in any of these circumstances:
Financial Asset Management Systems, Inc. is a debt collection agency. This is an attempt to collect a debt, by a debt collector, and any information obtained will be used for that purpose. Calls to and from FAMS may be monitored and/or recorded for quality assurance purposes.
