Whether you’re desperate for an alternative now, or just curious about how to get out of student loan debt someday, it never hurts to look at your options.
As you’ll see in the following list, most of these programs have very specific eligibility requirements. But if you’re genuinely struggling to pay back your student debt, there will be a program geared towards your financial need. It all depends on what type of student loans you have.
How to get out of student loan debt
1. Income-Driven Repayment Plans
If you still have a balance at the end of a 20 to 25-year income-driven repayment plan, the remainder is forgiven. Plus, one of these plans can decrease your monthly payment, as it is based on a percentage of your discretionary income.
Just keep in mind that stretching your payments over 20 to 25 years may actually end up costing you more in the long run. And any forgiven amount at the end of the repayment period will be considered taxable income.
2. Public Service Loan Forgiveness (PSLF)
If you work in public service for 10 years, you may be eligible for this public service loan forgiveness program.
It does require that this 10 years include at least 30 hours of public service work per week. You must also have made at least 120 qualifying monthly payments under one of the income-driven repayment plans. Upon making the 120th payment, you may submit the PSLF application for forgiveness.
If it sounds like you might not qualify for PSLF, answer a few questions below so we can help point you towards other repayment options. Otherwise, scroll down to read on.
3. Perkins Loan Cancellation and Discharge
If you have a Perkins Loan, you may be able to get out of paying back student debt if you volunteer in the Peace Corps or AmeriCorps Vista program, serve in the U.S. armed forces in a hostile area, or work in a variety of other professions including teaching, medicine, social service, and law enforcement.
4. Teacher Loan Forgiveness
If you’ve been teaching full-time in a low-income school, you may be eligible for Teacher Loan Forgiveness. You may have up to $27,500 of a Perkins Loan forgiven and up to $17,500 of a Direct Loan or Stafford Loan forgiven.
5. Closed School Discharge
If your school closes before you can finish your program, then you may be eligible for a Closed School Discharge of your student loan debt. To qualify, you must either be enrolled when the school closes or have withdrawn from the school less than 120 days prior to its closing.
If you did have a chance to finish your program before the school closed, and all you need is the diploma or certificate, you are not eligible for this discharge.
6. False Certification of Student Eligibility or Unauthorized Payment Discharge
Did your school make false certifications about your eligibility for the loan, or sign your name on an application or promissory note without your permission? Did they endorse a loan check without your knowledge, then fail to give you the proceeds or put the payment toward your loan? If you answered yes to any of these questions, find out more about how to get out of student loan debt through this option. You may be eligible for this discharge.
7. Unpaid Refund Discharge
If you withdraw, the school may owe a refund to the U.S. Department of Education or lender. If the school fails to provide this refund, you may be eligible for a discharge although it will only cover the unpaid refund amount.
8. Total and Permanent Disability Discharge (TPD)
Are you a veteran with a service-connected disability? Are you receiving Social Security Disability Insurance or Supplemental Security Income? Is a medical condition preventing you from engaging in any “substantial gainful activity” for the past 60 months or the next 60 months, or expected to result in death? You may be eligible for Total and Permanent Disability Discharge. Be sure to check out how to get out of student loan debt through this program.
9. Death Discharge
It’s grim but true, and worth noting. If the borrower dies, the loan is discharged. The same is true of parents who have PLUS loans. If the parent dies, or the student, the loan is discharged.
10. Discharge in Bankruptcy
It won’t be easy, but it is possible to have your student loans discharged with Chapter 7 bankruptcy. To be considered, you must initiate an adversary proceeding by filing a Complaint to Determine Dischargeability. It is then up to you to prove that paying back your student loans will cause you undue hardship.
That said, bankruptcy should always be a last resort. Exhaust every other option for paying back your debts first, student loans included.
Any one of the links above will go into greater depth about how to get out of student loan debt. If, after delving in, you find that you don’t meet any of the criteria, there are other options. Consider better ways of managing your student loan payments and look into student loan refinancing.
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