Direct Loan Discharge

A discharge releases you from all obligations to repay the loan and in some cases you may qualify for a full or partial Federal Stafford loan discharge. Your loan however, cannot be discharged because you didn't find a job after completing your program, didn't like the program you attended or didn't complete the program.

Of course, if you were unable to complete your degree for a valid reason such as your school closed or terminated your program, you would then be eligible for a student loan discharge.

If you don't qualify for a loan discharge or a partial loan discharge, you might qualify for loan repayment assistance. Loan repayment assistance is available to you if you're planning to service time in the U.S. Military or if you're a registered nurse.

If you're currently serving your country in active military duty your have been called to duty, you'll qualify for a military forbearance.

Beginning July 1, 2002, a borrower who is determined by a physician to be totally and permanently disabled can have his or her loan conditionally discharged for a period of up to three years. During this period, you don't have to pay the loan's principal or interest providing you continue to meet the cancellation requirements. If, after the three years, you continue to be permanently disabled the loan is fully canceled. If, during the three year conditional period you become able to earn money and you no longer meet the cancellation requirements, you must resume payment. Total and permanent disability is defined as the inability to work and earn money because of a injury or illness that is expected to continue indefinitely or to result in death.

Below is a summary of eligible Federal Direct Loan cancellation conditions.

Condition	Amount Forgiven	Notes
Borrower's total and permanent disability (1) 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 a loan forgiveness under the Direct Consolidation and the FFEL Consolidation Loan programs. I 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 1998-1998 academic year.
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

Military Forbearance

The U.S. Department of Education has issued special guidance for those called to active duty as a result of the September 11th terrorist attacks. If your loans are in an in-school status, in-school deferment status, or in a grace period when you are ordered to active duty or reassigned, the loan holder must maintain the loans in that status during your period of active duty plus time for you to resume enrollment in the next regular enrollment period that is reasonably available. The maintenance period may not exceed three years and includes the time for you to re-enroll.

If your loans are in repayment, the loan holder must grant a forbearance and suspend your repayment for the expected period of your active duty. This period is not to exceed one year from the beginning date of your active duty. Should your forbearance need to continue beyond one year, you will need to provide supporting documentation and a written agreement from the loan holder.

Repayment Assistance

You may qualify for repayment assistance if you serve in the military. For more information, contact your recruiting officer.

The U.S. Department of Health and Human Services has another type of repayment assistance through the NELRP - Nursing Education Loan Repayment Program. This program will help repay your student loans for registered nurses in exchange for their service in eligible facilities located in areas experiencing a shortage of nurses. You'll need to enter into a contract and agree to full-time employment in an eligible health facility for a 2-3 year period. In return, the NELRP will pay 60% of your total qualifying loan balance for a two year commitment and 85% of your qualifying loan balance for a three year commitment.

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