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Student Debt: Forgiveness versus Discharge

By: Michael Millington

In certain instances, student debts can be erased without the need to pay them off. Two of these debt elimination examples are debt forgiveness and debt discharge. Each of these occurrences results in the individual no longer having to pay the debt. However, there are differences in how the two forms of debt elimination operate and how they can be achieved. Since these are not traditional forms of debt relief, their acquisition methods are more specific.


Student Debt Forgiveness

Student debt forgiveness works as an incentive towards students going to work in specific job fields. Most of the jobs that allow for this type of forgiveness are public service jobs with some variations. Any student that ends up working for a city, county, state, or federal agency can be eligible for what is known as Public Service Loan Forgiveness. To fully qualify for this type of forgiveness, a candidate must make 120 payments (10 years’ worth of payments) while working full-time for a qualifying agency. After the payments have been made and the proposal has been approved, the remaining student debt is forgiven.

Another type of student debt forgiveness comes in the form of Teacher Loan Forgiveness. For students that have pursued teaching elementary or secondary school for five years, up to $17,500 in student debt could be forgiven. The only drawback is that the teacher must hold a low-income position for the entire time, which might create more financial issues than it solves. While this method of student debt forgiveness can eliminate a large amount of debt, it might only lead to a debt build up in order to get there.

For any students who have had Perkins Loans, they can also have some or all of this loan forgiven. This form of student debt forgiveness is only available to those who hold a select assortment of jobs. Generally, positions of employment with public service employers are eligible for this type of forgiveness. This includes police officers, firefighters, lawyers and certain positions in state licensed pre-kindergarten schools. Also note that members of the military may be able to have up to 100% of their Perkins Loans forgiven.


Student Debt Discharge

A student debt discharge will completely wipe out whatever student debt you might be holding. In most situations, this type of debt elimination is not initiated by the one holding the debt. The circumstances under which a student debt might be considered for discharge have to be dire. While having your entire student debt eliminated can be a wonderful thing, do note that the conditions required for this to happen are not normal.

In order for a student debt to be considered for discharge, a number of extenuating circumstances are considered. For instance, a death or total and permanent disability would be considered for a student debt discharge. If the university that issued the debt for educational services were to close down before you finished your education, your student debt might be discharged. You might also have your student debt discharged if you’ve been severely impaired as well (either physically or mentally).

While these are extreme situations, there are some slightly more common instances where your student debt can be eliminated. For instance, if you’ve been the victim of financial fraud in which a loan was taken out under your name, you might be eligible. Also, if you’ve filed for bankruptcy, you might be eligible for discharge (though this is very rare). One thing to remember is that there is no guarantee that student debts will be discharged (or forgiven) under the circumstances listed.


Are These Methods Beneficial?

Although forgiveness and discharge are methods of debt relief, they are not always the best ways to go when considering ways to alleviate student debt. Anyone who would consider this path would be limited to a choice selection in employment. It would greatly inhibit an individual who would not want to pursue the career paths necessary for eligibility. While the incentive may help to bolster the employment chances for city, state, and federal jobs, it also leaves out a vast majority of students who might require a form of relief from their debt.

Having to secure a particular job can be a stifling proposition, but the alternatives are not much better. The need to be deceased or otherwise incapacitated is a harsh but necessary prerequisite to give those who have no way to work the relief they need. The need for relief from debt in a severe medical situation might seem like common sense to some, and this initiative allows for much needed relief. However, this method of relief would only involve people who have experienced extreme trauma, which would effectively leave out the rest of those struggling with student debt.

To a somewhat lesser extent, the other requirements for qualification can be more accessible. Ironically, the method that most people have access to is the method that rarely ever results in student loan discharge. Bankruptcy is a form of debt relief that allows people the ability to either restructure their debts or discharge them altogether. In the event that a Chapter 13 bankruptcy is sought after, a restructuring of debt might result in smaller student debt payments for the duration of the bankruptcy. However, a Chapter 7 bankruptcy has little chance to result in student debt being discharged. The only way these debts would be discharged in Chapter 7 bankruptcy is if the borrower could show that paying these debts would result in undue financial hardship.


There are many differences between student debt forgiveness and student debt discharge, but both are meant to remove student debt from your life. However, other types of debt cannot be removed from your life as easily. If you struggle with credit cards, loans and other types of unsecured debt, don’t hesitate to reach out to the debt relief specialists at Guardian Debt Relief. We have extensive experience in settling multiple forms of unsecured debts and we can help you settle your debts too. Call one of our experts today and have a consultation for free. Don’t let debt get the better of you. Take the first step and contact Guardian Debt Relief today.

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