Student loans are meant to help you cement your future by giving you the opportunity to get an excellent education. Unfortunately, you find yourself in a catch-22 situation. Namely, you need to face paying it back, which has proven to be difficult for some people (about 40 million actually). This can feel like quite a mountain to climb, especially after considering that some people spend over ten years paying back their debt.
Despite the looming mountain of debt, there is some good news. Borrowers may be able to have their student loan debt cancelled altogether. While student loan forgiveness is technically not a new concept, new regulations from the government recently came into play after fraudulent practices were uncovered. These new regulations along with the established criteria are worth noting.
Those who are getting their hopes up will have to wait because debt cancellation depends on fairly limited circumstances. On top of this, keep in mind that only Federal student loans are eligible for cancellation or forgiveness. Here are more details on the overall eligibility criteria in light of the new regulations.
Serious Issues With Your Institution
Borrowers qualify for student loan forgiveness if there were issues of fraud with the educational institution involved. This does not mean you can cancel your student loans if you simply do not like your school or the people that are teaching you. To be more specific, eligible applicants must be clear victims of fraudulent or misleading school advertising. An example would be receiving false or skewed information that is clearly meant to influence a decision of attendance.
If your school closes while you are still a student due to the reasons mentioned above, then you also have a case to apply for cancellation. In addition, it you happen to leave the school just before it closes, then you can also apply for a cancellation.
Should there be specific issues with how the school is run causing an adverse effect on the educational process, then you may be able to have your student debt cancelled. In some cases, only partial cancellation is possible, but if the issues are serious enough, then a full cancellation may be in order. Keep in mind that the majority of cases do not qualify.
Misdirection or Identity Theft
Some educational institutions prey on prospective applicants. This form of fraud attempts to convince applicants of federal loan eligibility when the opposite may be true. For instance, some fraudulent schools falsify certification for the student loan application process.
In some cases, this leads to the borrower applying for student loans without a proper idea of what that entails. In other cases, some applications are sent in without the actual applicant’s authorization. Furthermore, some institutions require a fee, which is another bad sign. Many of these scenarios involve identity theft or manipulation.
If the loan application is accepted, the proceeds of the loan are delivered to the “institution.” At this point, the applicant is the victim of a scam either through identity theft or misdirection, and the applicant receives no funding while taking on student loan debt. If this happens, then a case for student loan cancellation is possible.
Working in Public Service/Military
Working in the public service field pertaining to either the military or public servant positions is grounds for student loan forgiveness. This is a reward that is often given by the government to encourage more people to join these important fields, since the earning potential is not as enticing as other career paths. There are various forms of Public Service loan forgiveness that can be applied for with the Federal government.
Disability or Death
There are some people who undergo serious debilitation, which limits or eliminates employment opportunities. In this instance, it may be impossible for a borrower to get the necessary income to repay a student loan. This is eligible grounds to apply for student debt cancellation.
In the event of death of the student loan borrower, the loan can be cancelled. It is worth noting that this does not happen automatically. If the process of cancellation is not followed, then the loan will be attached to the borrower’s estate or cosigner.
Student loan relief or cancellation is available through the proper steps and some red tape. In many cases, applications are refused, so the process has gained a strict regulatory reputation. On top of this, many predatory scams have originated with the sole intention of scheming borrowers in search of relief, so there is certainly quite a bit to look out for. With that being said, there are certainly cases of success, but these are often extreme cases.
Author: Jeff Gitlen
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