Student Loan Discharge
Student loans are one of the most commonly pursued financial aid options among students nowadays. Rising costs and never ending expenditures have made education an unaffordable feat for many, which has led to students looking for financial support in the form of loans and grants. The federal government and numerous private institutions offer student loans to those in need. Without a doubt, federal loans top the list when it comes to easy-to-get loans, low interest rates and easy repayment options. Although private loans are also growing popular, they still have certain drawbacks such as high interest rates.
Although loans can help a student pay for college and allow the student to pursue his or her academic goals, loans still have to be paid back to the lender along with interest. Due to the current economic situation, many students are facing financial issues and difficulty, which impacts their ability to repay their loans. According to recent researches, the amount of student debt in our economy is at an all-time high figure of $956 billion. Such a high figure is accompanied by increased default rates on student loans. To ease this troublesome financial situation for students, the federal government has designed various loan discharge programs and deferment programs.Student loan discharge can be defined as the cancellation of a student’s remaining debt. In other words, certain students can have their loan forgiven, leaving them in debt-free. As amazing as it sounds, it is important to note that loan discharge is only possible under certain circumstances. The following are a few situations under which a student may be have his or her loan forgiven:
- If a student becomes permanently disabled and cannot work or make money due to the illness/disability.
- If the student has passed away, the loan is most likely to be cancelled.
- If a student’s school/college shuts down before he or she was able to complete the educational program.
- If a student opts for a teaching career or serves in the military, he or she may qualify for a program that may have their loans discharged.
- If a student files for bankruptcy, this rarely occurs.
Benefits of Loan Discharge
One cannot deny the benefits of a student loan discharge. Having a loan cancelled means you no longer have to undergo the financial strain of repayments, which allows you to step out of the debt bubble and work to restore you financial situation. Other programs that help ease the burden of loan repayments include consolidation programs and partial cancellation programs.