Loan Discharge

Under certain circumstances, you may be eligible to have part or all of your federal student loans discharged (i.e., erased). These circumstances include school closure (a “Closed School Discharge”) and illegal conduct by your school (“Borrower Defense to Repayment”). The various types of discharges are described below.

A. Closed School Discharge

  • You may be eligible for a discharge of your federal student loans if you are unable to complete your program of study because your school closed while you were enrolled or within a short time (120 days) after you withdrew.
  • Students who qualify for a Closed School Discharge can receive a 100% discharge of federal loans obtained to attend the closed school.
  • Students who transfer credits to another school and complete a comparable program of study are not eligible for a Closed School Discharge.
  • To obtain a Closed School Discharge, you must submit a Closed School Discharge Application to your loan servicer. To find your loan servicer, log in to My Federal Student Aid or call 1-800-4-FED-AID.
  • For more information on Closed School Discharges, visit Closed School Discharge Information.

B. Discharge Due to Illegal Conduct by the School -- “Borrower Defense to Repayment”

If you were a victim of fraud or another violation of state law by your school, you may be eligible for a full or partial loan discharge of your Federal Direct Loans obtained to attend the program. For example, you may be eligible for a loan discharge if your school:

  • made false or misleading statements about the value of an educational program or the financing needed to pay for a program;
  • made false or misleading statements about the job placement rate of graduates of your program, or
  • engaged in other conduct that violates state law.
    • A loan discharge based on a school’s misconduct is called a “Borrower Defense to Repayment.”
    • For instructions on how to apply for a discharge based on the school’s misconduct, visit Borrower Defense to Repayment Information.
    • If you have questions about applying for a loan discharge based on your school’s fraud or illegal conduct, you can call the DOE at 855-279-6207

C. Other Grounds For Discharge

  1. Total and Permanent Disability
    Borrowers who are totally and permanently disabled are eligible for a discharge of their federal loans. For information and an application, visit TPD Discharge.
  2. Death
    If you, the borrower, die, then your federal loans will be discharged. If you are a Parent PLUS loan borrower, your loan may be discharged if you die, or if the student on whose behalf you obtained the loan dies. Contact the loan servicer for assistance.
  3. Bankruptcy
    While student loans are generally not dischargeable in bankruptcy, you may be able to discharge your loans in bankruptcy if you demonstrate that repaying your loans will create an “undue hardship.” Consult an attorney for legal advice on this issue.
  4. False Certification of Ability to Benefit
    Schools must certify that students who lack a high school diploma or equivalency diploma have the “ability to benefit” from the education provided. If your school falsely certified your ability to benefit, you may be eligible for a loan discharge. The school may have failed to test your ability or conducted testing in an improper manner. For more information, visit False Certification of Ability to Benefit.
  5. False Certification of Disqualifying Status
    If, at the time the school certified your loan, you had a physical or mental condition, legal status, or criminal record that would prevent employment in your field of study, you may be eligible for a loan discharge. For more information, visit False Certification of Disqualifying Status.
  6. Unauthorized Signature/Payment
    If a representative of your school signed your name without permission on the loan application, you may be eligible for a loan discharge. For more information, visit Unauthorized Signature Discharge.
  7. Unpaid Refund
    You may qualify for a partial unpaid refund loan discharge if your school failed to pay a tuition refund when you withdrew during the refund period published by the school. For more information, visit Unpaid Refund Information.
  8. False Certification as a Result of Identity Theft/Forgery
    You may qualify for a loan discharge if you believe a loan was falsely certified in your name as a result of identity theft or forgery.