School Loan Cancellation

A couple of Facebook fans who recently heard me on the Russ Parr Show have asked me to elaborate on the Student Loan Cancellation Program.

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.

Perseverance 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.

For more details, below are some links to previous articles which I have written regarding this topic:

• How to Qualify for a Student Loan Cancellation or a Student Loan Discharge
• Student Loan Cancellation Due to Death
• Student Loan Cancellation Due To Disability
• Student Loan Cancellations for School-Related Issues and False Certification
• Student Loan Cancellations for Teaching and Community Service
• Student Loan Cancellation and Discharge for Military Service
• Student Loan Cancellations In Bankruptcy Are Rare – But Possible
• Law School Loan Forgiveness
• Health-Care Related Loan Forgiveness

Health-Care Related Loan Forgiveness

By Lynnette Khalfani-Cox, The Money Coach

Did you go to med school or nursing school? If so, you may qualify to have some of your student loans forgiven.

If you have PhD or MD
A little-known loan repayment program at the National Institutes of Health can provide eligible college grads with up to $35,000 a year if you work or do research in the general clinical medicine, pediatrics, fertility or health disparities.

If you have a nursing degree
The Nurses Reinvestment Act is a scholarship/loan repayment program helps those graduates who serve in critical needs areas. The Nursing Education Loan Repayment Program (NELRP) will pay 60 to 85 percent of loans for registered nurses who work in areas where there is a shortage of medical staff.

This post is adapted from my book Zero Debt for College Grads: From Student Loans to Financial Freedom. Get the book now at Amazon.com.

Law School Loan Forgiveness

By Lynnette Khalfani-Cox, The Money Coach

The bad news is that most law school graduates have a ton of student loan debt. The good news is that many law schools forgive loans of students who serve in public interest or nonprofit positions.

Equal Justice Works is a great resource for how you can get law school loans forgiven. Browse its website or download its PDF brochure “Financing the Future: Responses to the Rising Debt of Law Students.”

Through that publication and others, you’ll discover how law schools, states, and philanthropies are helping college grads, especially lawyers, pay back their student loans.

The new trend is toward the development of so-called LRAPs: Loan Repayment Assistance Programs, as more and more conscientious members of society recognize that it’s not in the public’s best interest to have a whole generation of students awash in debt.

It’s especially harmful in the legal arena, because law school grads who can’t pay their student loans can’t take public interest (translate: lower-paying) jobs where they could help poor communities or those disenfranchised members of society who, without some assistance, would not have access to all their rights under the law.

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This is an excerpt from my book Zero Debt for College Grads: From Student Loans to Financial Freedom. Get the book now at Amazon.com.

Free Webinar: How Government and Nonprofit Employees Can Earn Public Service Loan Forgiveness

By Lynnette Khalfani-Cox, The Money Coach

If you take a job in public service, you just may qualify to have your loan forgiven.

A public service job is a full-time job in emergency management, government, military service, public safety, law enforcement, public health, public education, social work, public interest law services, child care, public library sciences, or any other job at an organization that is described in section 501(C)(3) of the Internal Revenue Code of 1986 n.

To learn what jobs to accept to qualify or whether or not you currently qualify to have your loan forgiven, Equal Justice Works is offering a free Webinar on the following dates (space is limited, so participants are required to register):

• Wednesday, May 20, 12:15 – 1:30 p.m. EDT (11:15 a.m. CDT, 9:15 a.m. PDT)
  https://equaljusticeevents.webex.com/equaljusticeevents/onstage/g.php?d=…
• Wednesday, May 20, 7:15 – 8:30 p.m. EDT (6:15 p.m. CDT, 4:15 p.m. PDT)
  https://equaljusticeevents.webex.com/equaljusticeevents/onstage/g.php?d=…
• Tuesday, May 26, 7:15 – 8:30 p.m. EDT (6:15 p.m. CDT, 4:15 p.m. PDT)
  https://equaljusticeevents.webex.com/equaljusticeevents/onstage/g.php?d=…

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.

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 Cancellations In Bankruptcy Are Rare – But Possible

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

By Lynnette Khalfani-Cox, The Money Coach

Under federal law, as of October 8, 1998, you can no longer discharge student loan debt in a bankruptcy proceeding. As with most laws, however, there are loopholes and exceptions to the rule.

In this case, it is technically legally possible to have your student loans discharged when you file for bankruptcy protection, but as a practical matter it is very, very difficult to get a judge to sign off on it.

To have your student loans cancelled via bankruptcy, you have to prove to a judge that repaying your educational debt would cause you a substantial and undue hardship as defined by case law in your jurisdiction.

Historically, most judges have been loathe to allow students to get rid of their student loans in bankruptcy court. Each claim is assessed on a case-by-case basis, and student loan discharges via bankruptcy are highly rare, even among those who’ve tried to demonstrate severe financial hardships.

This post is an excerpt from my book Zero Debt for College Grads: From Student Loans to Financial Freedom. Get the book now at Amazon.com.

Student Loan Cancellation and Discharge for Military Service

By Lynnette Khalfani-Cox, The Money Coach

Effective Oct. 7, 1998, all borrowers of Perkins loans are entitled to have those loans discharged if they served in the U.S. armed forces. This cancellation privilege applies to Perkins loan recipients regardless of when the loan was made or what the terms on the original promissory note are. Military personnel qualify for loan cancellations in an amount up to 50 percent of their Perkins loans if they serve in areas of hostility or regions of imminent danger.

For other ways to qualify for a loan cancellation, read:

• Student Loan Cancellations for Teaching and Community Service
• Student Loan Cancellations for School-Related Issues and False Certification
• Student Loan Cancellation Due To Disability
• Student Loan Cancellation Due to Death
• A Student Loan Cancellation Success Story

My book “Zero Debt for College Grads: From Student Loans to Financial Freedom” has even more helpful information. Get the book now at Amazon.com.

Student Loan Cancellations for Teaching and Community Service

This post is part of a week-long series about loan cancellations.

By Lynnette Khalfani-Cox, The Money Coach

Two other categories that you might qualify for with regard to getting your student loans discharged or cancelled pertain to service-based work. You can get your educational loans cancelled, or at least greatly offset, for jobs in teaching and public service.

Up to $17,500 Forgiven

Teachers qualify for loan forgiveness in the amount of $5,000 or $17,500 under the Teacher Loan Forgiveness Program. The money is usually doled out to:

• those who teach in low-income neighborhoods
• those who teach certain math, science, and special education subjects, and
• individuals who work in places where there are critical shortages of qualified educators

Additionally, child-care providers, nurses, and others in the medical field who are helping individuals in impoverished areas or high-need communities can also qualify for loan discharges.

So if you happen to be a doctor or nurse working in one of these areas, by all means investigate and see whether you qualify for a loan cancellation and in what amount.

This post is an excerpt from my book Zero Debt for College Grads: From Student Loans to Financial Freedom. Get the book now at Amazon.com.

A Student Loan Cancellation Success Story

By Lynnette Khalfani-Cox, The Money Coach

While many student loan cancellations can be difficult to obtain, some are not. Take the case of Jaclyn Ward, who went to Harvard College and then graduated from Fordham Law School in 2003. I once interviewed Ward for Essence Magazine, and she explained to me that her position as an assistant district attorney, in the Manhattan, New York DA’s office, enables her, over a five-year period, to get $4,000 in undergraduate Perkins loans forgiven, and another $17,900 in law school loans discharged.

Every year, Ward simply fills out a form indicating that she still works for the DA’s office. “Not too difficult considering that I will get approximately $22,000 in tax-free loan forgiveness,” she said.

“The most difficult part of the whole process was getting access to the knowledge,” Ward added. “I spent a lot of time investigating what options were open to me to help me with my loans. When I initially told Harvard that I was eligible for the Perkins forgiveness they told me I wasn’t because I wasn’t considered law enforcement. I had to do research and show them the congressional record where Congress deemed ADAs law enforcement officers. It’s amazing how little financial aid officers know sometimes.”

This post is an excerpt from my book Zero Debt for College Grads: From Student Loans to Financial Freedom. Get the book now at Amazon.com.

Further reading on student loan cancellations:
Student Loan Cancellation Due to Disability

Student Loan Cancellation Due to Death

How to Qualify for a Student Loan Cancellation or a Student Loan Discharge

By Lynnette Khalfani-Cox, The Money Coach

For a college grad with big student loans, it’s probably the closest thing you can imagine to hitting the lottery: getting a discharge or cancellation of all your loans and making those debts instantly vanish. Unlike the lottery, you’re not going to receive a million dollar prize. But if you can get a lender to agree to cancel or forgive $20,000, $50,000, or even $100,000 worth of student loans, wouldn’t that feel like you hit the jackpot?

Loopholes
Well, here’s the good news for anyone struggling with federal student loan debt: you can, in fact, have those enormous student loans completely wiped out—by taking advantage of instances where you’re already eligible for loan cancellation or forgiveness. Let’s call these instances loopholes of the student loan world, because they represent narrow windows of opportunity that you take advantage of by escaping repayment of your student loans altogether.

Check back every weekday this week for a few tips on how to get your student loans canceled.

And here’s even better news: even if you’re not eligible for a student loan cancellation, next week I’ll tell you about programs and initiatives where you get others to pay off your loans on your behalf. Some of them require you to volunteer with non-profit groups or work off your debts by engaging in activities that promote various social or public goals; others are merely yours for the asking.

In the meantime, also read my blog series “Seven Smart Ways to Pay Off Student Loans Fast.”

For even 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.