What is Student Loan Cancellation?

A student loan cancellation, also called student loan forgiveness or discharge, occurs when the debt is wiped clean and the student is no longer obligated to pay. Under some circumstances, the student may even be eligible for reimbursements from the government for money that was paid towards the debt. Students are eligible for student loan cancellations under rare circumstances. The following are reasons a student may qualify for a cancellation.

Reasons For Loan Cancellations

According to the Department of Federal Student Aid, all loans received under programs endorsed by Title IV of the Higher Education Act can be canceled for several different reasons, including death and permanent disability after the loan is disbursed. Other reasons for student loan cancellations include school closings, fraud and military service. Students may qualify for a loan cancellation if the loan was taken out on or after January 1, 1986, and the school closed while you were enrolled or within 90 days of your withdrawal. Active duty service members who are or were in an area of hostilities or an area of imminent danger may qualify for up to a 50 percent cancellation. If you received a direct loan on or after January 1, 1986, and the loan was falsely certified by an eligible school, you may qualify for a false certification discharge.

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