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How Would You Know If You Qualify For Student Loan Cancellation?

By Ruth Racey
Published: Friday, November 13th, 2009

Under certain conditions, you may be able to ask for cancellation of repayment of federally guaranteed student loans, apply to another payment schedule that suits your income, or defer current payments. If you failed to pay your loan, you can get out of default and avoid getting into court, salary garnishment, or a loss of tax refunds.

Student loans are complex, depending on the kind of loan applied for and the time you applied for it. It is important to study as well as understand the type of loan before making your move. These types would affect your ability to do certain things such as: negotiating with your lenders, deferring payments, or possibly canceling the loan altogether.

There are three major types of federally guaranteed student loan. These are bank loans, loans issued by the Department of Education, and campus-based loans. Bank loans are popularly known as Federal Family Education Program or FFELP loans, which include PLUS (parent) loans, consolidation loans, Stafford Loans, and SLS Loans. These are given by the Department of Education are simply called Direct Loans which also include PLUS, Stafford, and consolidation loans. Finally, campus-based loans are identified as Perkins Loans or National Direct/Defense Student Loans (NDSLs).

Depending on the kind you have and when it was taken out, you may possibly cancel a portion or the entire amount borrowed as long as you qualify to one of the following conditions:

  1. The student who applied has died.
  2. You became completely and permanently disabled.
  3. The school where you were studying closed before completing your educational program.
  4. Your school has mistakenly certified you to be an eligible recipient of a student loan.
  5. You stopped education, were entitled a refund, but did not receive money.
  6. You teach in a Department of Education-approved institution, helping financially-deprived students, or in designated areas of teacher shortage (other kinds of cancellations for teachers are also available for Perkins loans).
  7. You serve the country through the U.S. military (there is partial cancellation available only for Perkins).
  8. You are a full-time employee of a government or non-profit agency or company providing services to financially-deprived, high-risk children with their families (only for Perkins).
  9. You are a full-time medical technician or nurse (only for Perkins).
  10. You are a full-time corrections or law enforcement officer (only for Perkins).
  11. You are a full-time member of a Head Start program staff (only for Perkins).
  12. You are a VISTA or Peace Corps volunteer. This is only applicable for Perkins.

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