You are having problems with the repayment of your student debt? You are thinking about consolidating it but you have also heard about the possibility of getting it discharged or forgiven? Well, though it is possible, there are many misconceptions regarding this subject and what many people don’t understand is that you are either entitled to a discharge or not. Let’s make things a little clearer.
It is important to distinguish discharge from forgiveness or cancellation. These are two different concepts that imply diverse things. And though the effects of both may be similar, the circumstances or conditions under which you can qualify for loan discharge or loan forgiveness are completely different and are attributable to diverse causes. As regards to consolidation, it is a completely different concept with distinctive effects and causes.
Loan Forgiveness Explained
Loan Forgiveness is the cancellation of the debt when the lender considers that the debt has been satisfied by other means than regular repayment of the loan. Federal student loans can be forgiven under certain circumstances either partially or in full. There are selected criteria that the lender may decide that makes you eligible for loan forgiveness. In order to find out you’ll need to consult with the lender. When it comes to federal student loans there are some particularities.
Federal student loans can be forgiven among other reasons if: you carry out volunteer work in predetermined areas or fields (Since the work you do is not paid, at least, the government forgives your debt). If you carry out military services you can also be eligible for partial or full forgiveness of your student debt. And Finally, you can also obtain forgiveness of your loans if you practice medicine, law enforcement or teach in certain areas or for selected underprivileged groups.
Loan Discharge Explained
Loan discharge is the annulment of the loan contract with the cancellation of the debt when you are legally (by law or contract) entitled to it. There are many reasons why you can have the right to claim the loan discharge but probably you don’t wish for these conditions to happen since the law grants this right as means to repairing a damage that has been done to the borrower one way or another.
In order to show some light over this obscure concept we will give some examples of the situations that grant you this right: death or disability of the applicant, liability of the school due to fraud or certain lack of fulfillment of the contract, a forged signature or other counterfeit, bankruptcy (when the repayment of the loan causes hardship as declared by the court).
An Alternative: Student Debt Consolidation
Chances are that you won’t qualify for either discharge or forgiveness of your student debt. If you still want to bring some ease to your financial life, the smartest thing to do is to consolidate your student debt. By consolidating you can obtain up to 30 years to repay your debt and consequently obtain significantly lower monthly payments that you won’t have problems affording. Moreover, by consolidating your federal student loans you can lock the interest rate thus avoiding rate variations that would otherwise cost you thousands of dollars.
