Can I Get Forgiveness or Cancellation of My Student Loans in California?

 

Under certain circumstances, you can get your student loans wiped out. Your options depend on what kind of loans you have and when you took them out.

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President Biden's Loan Forgiveness Plan Killed By US Supreme Court

You have probably heard about President Biden's student loan forgiveness program that was announced in October 2022. The Supreme Court nixed that program at the end of June 2023.

President Biden has announced that the pause in student loan payments that began in the Covid pandemic will end, and the first payments will come due in October 2023.

For details about the 2022 student loan forgiveness program under the Biden administration, see this article.

So, with Biden's forgiveness plan eliminated, borrowers are left with the existing loan reduction programs offered by the Department of Education.

Loan Forgiveness Programs That Still Exist,  Other Than the Biden Plan Rejected By the Supreme Court

The remainder of this article covers other types of student loan forgiveness programs that were in existence before the general forgiveness program that President Biden announced in October 2022.

If your student loans are canceled, you don’t have to repay them. To qualify for loan cancellation (also called "discharge" or "forgiveness"), you must meet very specific requirements that depend on the type of student loans you have and when you got them.

Student Loans Canceled

 Photo Daniel Kulinski via Flickr Creative Commons

Federal Student Loans 

You may be able to cancel your federal student loans under the following circumstances. If your loans are eligible for discharge, it usually doesn’t matter whether you’re current on your payments or in default. In some cases, you may even be entitled to a refund for loan payments you’ve already made.

If you have federal Perkins loans, scroll down to the bottom of this list for information that applies specifically to you.

Death of the Borrower

Federal student loans are canceled if the borrower dies. (For a PLUS loan, the loan is canceled if either the student or both parents have died.) A family member or the executor of the estate must send a copy of the death certificate to the loan servicer.

Permanent Total Disability

If you become totally and permanently disabled, you can cancel your federal student loans. To do this, you must prove your disability to the U.S. Department of Education. For details, see Total and Permanent Disability Discharge on the U.S. Department of Education website. Also, check out the Disability Discharge Self-Help Packet offered by Student Loan Borrower Assistance (SLBA).

When you’re ready to apply, you can begin the disability discharge application online.

2022 update: 

Student loan borrowers who have certain types of “total and permanent” disabilities are eligible for discharge of their student loans, but historically many eligible borrowers have missed out on this relief due to paperwork barriers. In recent years, the government began providing automatic discharges to some disabled borrowers based on a data-matching program with the Department of Veterans Affairs, and now the Department has begun also providing automatic discharge to over 323,000 student loan borrowers based on data matching with the Social Security Administration.  Borrowers will have $5.8 billion in loans automatically discharged unless they opt out after receiving notice of their eligibility for discharge.  See NCLC’s Student Loan Law §§ 10.8.5.310.8.5.4.

Borrowers automatically qualifying for the disability discharge are those eligible for Social Security Disability Insurance (SSDI) and/or Supplemental Security Income (SSI) benefits and whose next scheduled disability review is no earlier than five and no later than seven years. The Department will return payments made after the effective date of the determination by the VA or SSA to borrowers who receive the automatic disability discharge. See 34 C.F.R. §§ 674.61 (Perkins Loans), 682.402 (FFEL), 685.213 (Direct Loans), as promulgated at 86 Fed. Reg. 46,972 (Aug. 23, 2021).

In addition, the Department has ceased asking borrowers for earnings information in the three years after discharge is approved. This “monitoring” process was found to be a major barrier to relief, as many disabled borrowers had their loans reinstated not because their income was too high, but because they missed paperwork requirements. The Department is also moving toward fully eliminating the three-year monitoring period through regulatory amendments.  For more on federal student loan disability discharges, see NCLC’s Student Loan Law § 10.8.

Public Service Employment

You may be able to cancel your Federal Direct Loans after you make 120 on-time, monthly payments -- that’s ten years' worth -- while working at a public service job. To find out what types of employment qualify and what kinds of loans you can cancel, see Public Service Loan Forgiveness on the U.S. Department of Education website.

Military Service

Military service is covered by the public service loan forgiveness program discussed just above. Except for Perkins loans (see below), there are no additional federal student loan cancellation programs for members of the Armed Forces.

Teaching Low-Income Students

If you have been teaching full-time in a low-income elementary school, secondary school, or educational service agency for at least five years, you may be able to cancel part or all of your loans. For details, see Teacher Loan Forgiveness on the U.S. Department of Education website.

Closed School

You may be able to cancel your federal student loans if your school closes either while you are enrolled or within 90 days after you withdraw. You qualify only if you were unable to complete your educational program because of the closure. For complete details, see Closed School Discharge on the SLBA website. You can find a link to the closed school discharge application below.

If you have questions about your closed school, send an email or make a phone call to your closed school representative on this list. If you don't qualify for a federal school-related discharge, you may be able to get relief from a state tuition recovery fund (see below).

Automatic Loan Cancellation for All Students at  Corinthian, ITT, Westwood, and Marinello

The Department is automatically discharging approximately $10 billion in federal student loans for students who attended four large, multi-campus, for-profit schools, based on widespread predatory misconduct by those schools.  No borrower application is required. 

Eligible borrowers from the four schools are:

  • Corinthian Colleges: All 560,000 borrowers with outstanding loans who attended any of the Corinthian campuses from 1995 through its closure in April 2015.
  • ITT Technical Institutes: All 208,000 borrowers with outstanding loans who attended any ITT campus from January 1, 2005, through its closure in September 2016.
  • Westwood College: All 79,000 borrowers with outstanding loans who attended any of the school’s campuses from between January 1, 2002, and when the school closed in 2016.
  • Marinello Schools of Beauty: Approximately 28,000 borrowers with outstanding loans who attended any of the school’s campuses between January 2009 and when Marinello closed in February 2016.

The discharge applies to all outstanding federal student loans, including Direct Loans, commercially held FFEL Loans, and Parent PLUS Loans. Borrowers who already fully paid off their loans before the group relief announcement was made will not be included in this relief. The Department announced that it will also provide refunds for payments already made on outstanding loans, delete adverse credit history associated with the loans, and restore eligibility for further federal student aid.

False Certification of Student Eligibility or Unauthorized Payment

You may be able to cancel your student loans for one of the following reasons:

  • Your school falsely stated that you were eligible for loans based on your ability to benefit from its training.
  • Your school applied for or obtained loans in your name without your authorization.
  • Your loan application was the result of identity theft.
  • Your school certified your eligibility for loans, but you were later disqualified from employment in the occupation for which you were being trained.

For complete details, see False Certification Discharge on the SLBA website. You can find a link to these discharge applications below.

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Unpaid Refund 

You may be able to cancel your federal loan if you left school early but the school didn’t refund money it owed on the loan. You can cancel only the amount of the unpaid refund. For details, see Unpaid Refund Discharge on the SLBA website.

Perkins Loan Cancelation Programs

The rules for canceling federal Perkins loans are slightly different than those for other types of federal loans; they include some of the options above and many additional types of public service work.

To see a complete list of cancellation options for Perkins loans, see the Federal Perkins Loan Cancellation and Discharge Summary Chart on the U.S. Department of Education website.

State Tuition Recovery Funds

Many states maintain tuition recovery funds to assist students who enrolled at fraudulent schools. A state program may help you even if you don't qualify for a federal school-related cancellation program. 

If you were the victim of a fraudulent school and you haven't been reimbursed for the costs of enrollment, contact the California Department of Consumer Affairs (Bureau for Private Postsecondary Education) at 888-370-7589 to find out whether you are eligible for state relief.

Private Cancellation Programs

Some private employers offer student loan repayment programs as incentives for their employees. Ask your employer for more information.

Private Student Loans

Private student loan companies aren't legally required to participate in loan cancellation programs. Unless the lender promised you could cancel your loans under certain circumstances, it’s up to them to decide whether to give you a cancellation option. Some large lenders, such as Sallie Mae and Wells Fargo, do have limited loan discharge programs -- for example, if the borrower dies or becomes totally and permanently disabled.

Review your loan contract to see whether it includes provisions for cancellation, and talk to your lender if you have questions. If you can’t get clear information from your lender, you can file a student loan complaint with the Consumer Financial Protection Bureau (CFPB).

Be aware that if a private lender cancels your loan, you will have to report it for tax purposes. (The idea is that if a lender cancels a loan, the money you now don't have to pay is just like income.) For more information, consult a tax professional.

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Federal Loan Cancellation Applications

The links below will take you directly to a variety of applications for canceling your student loans. Before completing a cancellation application, contact your loan servicer to be sure it is the most recent version. Your servicer will handle your application when it is complete.

 

Below is the chart of discharges according to the Department:

 Type of Forgiveness, Cancellation, or Discharge Direct Loans Federal Family Education Loan (FFEL) Program Loans  Perkins Loans
Public Service Loan Forgiveness  X  X*  X*
Teacher Loan Forgiveness  X X  
Perkins Loan Cancellation (includes Teacher Cancellation)      X
Total and Permanent Disability Discharge  X  X  X
Death Discharge  X  X  X
Bankruptcy Discharge (in rare cases)  X  X  X
Closed School Discharge  X  X  X
False Certification of Student Eligibility or Unauthorized Signature/Unauthorized Payment Discharge X X  
Unpaid Refund Discharge X X  


Discharging Student Loans in Bankruptcy

To get rid of student loans in a bankruptcy proceeding, you'll need to convince the bankruptcy court that paying your loans would cause you "undue hardship." This is a difficult standard to meet. To learn more, see Can I Discharge My Student Loans in Bankruptcy?

Learn More

For more information about programs that can help you wipe out your student loan debt, see Student Loan Debt Forgiveness Programs.

For general advice on handling your student loans, see Top Tips for Dealing With Student Loan Debt.

If you're struggling to make payments, see What If I Can't Pay My Student Loans?

If you need additional support, see How to Get Help With Student Loan Problems.


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Jurisdictional relevance: ST

There are versions of this article for each State.