What to Do if Your Student Loan Cancellation Application Is Denied

This post is the last of a week-long series of articles about how to qualify to get student loans canceled.

By Lynnette Khalfani-Cox, The Money Coach

I’ve already warned you about how difficult it can be to get a student loan discharged. Unfortunately, part of what makes it tough is that for most discharges, the ultimate authority on the matter is the holder of your loan.

The loan holder has the final power to say yes or no to your request for a discharge and you don’t have the right to appeal the decision to the Department of Education, except in two instances: with false certification and forged signature discharges on FFEL and direct student loans.

Ask for a Review
If your claim for a discharge for these types of loans is rejected, you can take your case to the department and ask officials there to review your denial.

Other than that, your best bet in handling a rejected application, if you truly feel you have a valid and worthy claim, is to be persistent in your pursuit of a discharge and to provide as much documentation to your lender as possible in support of your case. This may mean making multiple financial disclosures about your personal situation, explaining your argument time and time again to different people at your lender’s office, or writing letters to supervisors or an ombudsman within a bank or lending institution.

Since the ultimate decision rests with the lender, that’s the place you have to target your efforts.

Get Tips from Loanholders
You should also try to find people who’ve been successful in getting the type of discharge you’re seeking. Ask them for tips and tricks they learned along the way. That firsthand advice from someone who’s been through what you have—and received a hard-fought discharge—could be just the prescription you need to turn a rejection into an approval.

For more information on paying off your student loans, check out my book Zero Debt for College Grads: From Student Loans to Financial Freedom. Get the book now at Amazon.com.

Student Loan Cancellation Programs—Big Hassles, Even Bigger Payoff

By Lynnette Khalfani-Cox, The Money Coach

Under federal law, you can get your federal student loans canceled or discharged for many different circumstances.

Reasons for loan discharge:

• Death
• Total and permanent disability
• School-related issues or improper certification by your school
• Full-time teaching or public service work
• Military service
• Bankruptcy

Before I explain the nuts and bolts of what’s required for these various loan cancellations, let me first say that there are a multitude of scenarios that won’t get you a loan discharge.

Reasons that won‘t get you a loan discharge:

• If you dropped out of school for any reason
• experienced personal problems that forced you to abandon your studies
• didn’t like your instructors
• couldn’t get a job after graduation
• were plagued by financial difficulties
• if you thought the quality of the instruction you received was sub-par

None of those reasons will hold weight with the Department of Education.

Perserverance Required
Let me also caution you that getting a student loan canceled or discharged is rare and often requires tremendous perseverance, know-how, and work on your part.

Having said that, even though obtaining a discharge can be a big hassle, it is nevertheless certainly worth the effort and frustration you may experience in the process.

Tuesday through Friday this week I will post a few tips on how to get your student loans canceled, so please check back.

For more information on paying off your student loans, check out my book Zero Debt for College Grads: From Student Loans to Financial Freedom. Get the book now at Amazon.com.

5 Websites Everyone with Student Loans Should Know

By Lynnette Khalfani-Cox, The Money Coach

It takes the average college graduate 15 years to repay his or her student loans, according to the College Board. A lot can happen over that time. So if you ever find yourself struggling to pay your college debts, or even just needing more information about the loans you’re carrying, the following five websites just might prove to be indispensable.

1. http://www.nslds.ed.gov
   This is the website for the National Student Loan Data System. If you’re confused about your college debt, or don’t even remember how many loans you took out and who you owe, this is the place to start.The NSLDS database gives you 24/7 access to an itemized list of all the federal loans you took out, including info about the loan status (in deferment, default, repayment, etc.), loan amount, date, the amount cancelled (if any), as well as the outstanding principal and interest you owe.

    

   Tip: To access the NSLDS, you must first obtain a four-digit PIN here from the Department of Education.

2. http://www.finaid.org/calculators
   This is the website for the online college loan calculators provided by FinAid. These calculators help you figure out how much principal and interest you’ll pay over time for various federal student loans, based on the four different loan repayment programs you can select:

    

   1. the standard loan repayment plan, where you pay a minimum of $50 a month and your payments last for as long as 10 years;
   2. the extended repayment option, which also requires at least $50 monthly payments, but which lets you pay off your educational loans over 12 to 30 years;
   3. the graduated repayment program, which lasts from 12 to 30 years and allows you to pay as little as $25 a month; and
   4. the income-contingent repayment plan, which permits you to make payments as low as $5 a month and which lasts for 25 years.
3. http://www.opm.gov
   This is the website for the Office of Personnel Management (OPM). Here’s where you can learn about the government’s Federal Student Loan Repayment Program.In a nutshell, this program allows any federal agency that you work for to pay off up to $10,000 worth of your student loans per year, up to a maximum of $60,000. So if you haven’t made a real dent in your student loans, get the government to pay off your college debts.

    

   For more info, call the OPM at 202-606-1800 or write: Office of Personnel Management; 1900 E Street NW; Washington, D.C. 20415.

   What’s the catch? You have to work for a government agency – any one, at any location in the country.

4. http://www.loanconsolidation.ed.gov
   This is the website for the Federal Direct Consolidation Loan Info Center. Go to this site to get answers to any questions you may have about consolidating your student loans. You’ll find information on who is eligible to consolidate college loans, how to handle defaulted student loans, and even tips on consolidating loans that have already been consolidated. (Despite many misconceptions on this topic, multiple loan consolidations can be done under certain circumstances)
5. http://www.ombudsman.ed.gov
   This is the website for the Federal Student Aid Office of the Ombudsman. This agency’s role is to help you, as a last resort, to resolve difficulties you may have with you lender or loan servicing company.To first try to resolve a problem yourself, use this online “Self Resolution Checklist” from the Ombudsman’s office.

    

   If you have complaints about your lender or disputes you haven’t been able to settle, the Ombudsman will listen to your grievances, and if they’re justified, the Ombudsman contact the lender on your behalf.

   To reach the Ombudsman’s office, call: 877-557-2575, or write: U.S. Department of Education; Debra Wiley, FSA Ombudsman; 830 First Street NE; Fourth Floor, Washington, D.C. 20202-5144.

Lastly, for more information on paying off your student loans, check out my book, Zero Debt for College Grads: From Student Loans to Financial Freedom. Get the book now at Amazon.com.