Under certain circumstances, you can cancel your student loans. If you are successful in canceling your student loan, you may be entitled to receive all the money that’s been seized and all payments that you made. Before you get too excited, you should note that canceling a student loan can only happen under certain very limited circumstances. These are:

  1. School Closed. The Close School cancellation applies to federal family education loans (“FFEL”), Federal direct loans, and Perkins loans. If your school has closed, you may very well be eligible to cancel your loans.
  2. False certification. If a borrower has borrowed money through a school that has falsely certified the borrower’s eligibility, then the borrower may cancel that loan. The Department of Education recognizes four bases for false certification including:
    • the school falsified and non-high school graduate’s ability to benefit from the program;
    • the school enrolls a student unable to meet minimum state employment requirements for the job for which the student is being trained;
    • the school forges or alters the student loan note or check endorsement;
    • the borrower is a victim of identity theft.
  3. Disability cancellation. The Bowers permanent and total disability is grounds for student loan discharge.
  4. Death. The borrower’s death is a defense to collection actions on Stafford, SLS, Perkins and federal direct loans.
  5. Unpaid refund. Provides for discharge based on the school’s failure to make an owed refund to the student. State tuition recovery funds should also be considered.
  6. Public-service and other job-related cancellations. These cancellations are tied to the borrower’s profession and generally require a minimum number of years of full-time employment various fields. Their special provisions and some loan programs for military service members as well.
  7. Cancellation for repayment. Borrowers may also be able to cancel loan balances after 25 years of repayment through income based or income contingent repayment plans.
  8. Bankruptcy. Some student loans may be discharged in bankruptcy. Be very careful with this item because there is a very high standard to meet in the bankruptcy court in order to obtain loan cancellation on this basis. The student must show undue hardship in order to qualify for loan cancellation on the basis of bankruptcy.

If you’ve been harassed or abused by student loan debt collector, call or e-mail Attorney Gary Nitzkin at Michigan consumer credit lawyers toll-free at (888) 293-2882.

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