April 12, 2024
Loans

Can your student loans be erased if they are defaulted?


In the United States, Public Service Loan Forgiveness (PSLF) is the most common method people use to have their student loansforgiven.

In certain situations, you can apply to your federal student loans forgiven, canceled, or discharged.

That means you won’t have to pay back some or all of your loan(s).

The Joe Biden administration has given the green light to forgiving loans worth billions of dollars during the last two years, according to Forbes.

An estimated 3.6 million borrowers have had their student debt cancelled and more will be awarded similar relief with the Education Department rolling out several new initiatives.

PSLF allows qualifying federal student loans to be forgiven after 120 qualifying payments (10 years), while working for a qualifying public service employer.

If you work, or have worked, in public service such as government (federal, U.S. Military, state, local, or tribal) or certain non-profit organizations, you might be eligible for the PSLF Program.

Likewise, in more serious cases such as crime, where forgery has occurred or a person has declared bankruptcy for example, there may be more options to discharge the loan.

Depending on the type of forgiveness, cancellation, or discharge you’re applying for, you may have to make payments while your application is reviewed.

Can student loans be erased if they are defaulted?

According to the Federal State Aid website, Defaulted Direct Loans are not eligible for Public Service Loan Forgiveness (PSLF).

However, a defaulted loan may become eligible for PSLF if you are able to resolve the default.

If you don’t qualify for loan forgiveness, cancellation or discharge, you must repay your loan, whether or not you:

  • Complete your education
  • Find a job related to your program of study
  • Are happy with the education you paid for with your loan
  • Or were a minor (under the age of 18) when you signed your promissory note or received the loan



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