Difference Between Student Loan Forgiveness and Discharge

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Lauren Graves

By Lauren Graves

May 7, 2020

If you’ve ever wondered what the differences between student loan forgiveness and student loan discharge are, you’re not alone. These words are often confused because they all have the same translation: you don’t have to pay back some or all of your student loans. 

So why use different terms? Because the conditions of each are different and these programs cover different student loan types. If you qualify for one of these forms of debt cancellation, make sure you know why and what it means. 

Please note that, in general, student loan cancellation programs are only for federal student loans provided by the U.S. Department of Education. This is because federal student loan cancellation for certain circumstances is required by law and private loan cancellation is not. There are private loan cancellation programs, but they are much more limited and difficult to qualify for.

Student Loan Forgiveness 

Student loan forgiveness is granted to individuals in exchange for specific actions or services, which can be employment- or volunteer-based. Public service employees loan forgiveness and teacher loan forgiveness are the two main categories of forgiveness. 

The Public Service Loan Forgiveness program (PSLF) covers many public-service full-time employees such as military personnel, emergency management employees, law enforcement officers, early childhood educators, government workers, and more. You might qualify if you have made at least 120 monthly qualifying payments on your direct loans.

Teacher loan forgiveness, carried out under The National Defense Education Act, is given to certain teachers with direct loan debt. There are several criteria you must meet to qualify, but essentially you have to have taught at a low-income school for five years, you must have sufficient content knowledge, and you must be “highly qualified. 

Public service employees loan forgiveness applies to direct subsidized and unsubsidized, direct PLUS for grad students/parents, Perkins, and direct consolidation loans. Only direct loans, not FFEL loans, are eligible. Teacher loan forgiveness applies to direct subsidized and unsubsidized, Perkins, and direct consolidation loans.

Student Loan Discharge Definition

Student loan discharge is unique in that it doesn’t need to be “earned.” Your circumstances qualify you when you are wrongfully indebted. 

If your debt is fraudulent in any way, you might also qualify for total or partial discharge. You could be eligible for closed school discharge if the school you were attending closed while you were enrolled, unpaid refund discharge if you withdrew from a school and were not paid back, or false certification discharge if your loan was illegitimate. 

Death, permanent disability, identity theft, and bankruptcy are just some types of loan discharge. Most types of direct loans—direct subsidized or unsubsidized, direct PLUS for grad students/parents, Perkins, and direct consolidation—are covered under these terms.

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