Is it ever possible to have my Stafford Loan discharged (canceled)?
Yes, in certain circumstances. A discharge releases you from all obligations to repay the loan. A complete list of cancellation provisions is given below.

Your loan can’t be canceled because you didn’t complete the program of study at the school (unless you couldn’t complete the program for a valid reason—because the school closed, for example). Cancellation also is not possible because you didn’t like the school or the program of study, or you didn’t obtain employment after completing the program of study.

For more information about discharge, Direct Stafford Loan borrowers should contact the Direct Loan Servicing Center. FFEL Stafford Loan borrowers should contact the lenders or agencies holding their loans.

DIRECT LOAN AND FFEL DISCHARGE/CANCELLATION SUMMARY

Cancellation Conditions Amount Forgiven Notes
Borrower's total and
permanent disability1
or death 100% For a PLUS Loan, includes death but not disability of the student for whom the parents borrowed.
Full-time teacher for five consecutive years in a designated elementary or secondary school serving students from low-income families Up to $5,000 of the aggregate loan amount that is outstanding after completion of the fifth year of teaching. A borrower might qualify for loan forgiveness under the Direct and FFEL Consolidation Loan programs. If so, only the portion of the consolidation loan used to repay Direct Stafford Loans or FFEL Stafford Loans qualifies. For Direct and FFEL Stafford Loans received on or after October 1, 1998, by a borrower with no outstanding loan balance as of that date. At least one of the five consecutive years of teaching must occur after the 1997-98 academic year. (To find out whether your school is considered a low-income school, click here.
Bankruptcy (in rare cases) 100% Cancellation is possible only if the bankruptcy court rules that repayment would cause undue hardship.
Closed school (before student could complete program of study) or false loan certification 100% For loans received on or after January 1, 1986
School does not make required return of loan funds to the lender Up to the amount that the school was required to return For loans received on or after January 1, 1986
Child care provider (demonstration project only—limited funds). A.A. or B.A. in early childhood education required. Must have worked for two consecutive years in eligible child care facility serving lowincome community. Up to 100% For Direct and FFEL Stafford Loans received on or after October 1, 1998, by a borrower with no outstanding loan balance as of that date. For more information, click here. Or, call 1-888-562-7002.
- posted by Mark Pane @ 8:17 AM