Home Finance 7 Little-Known But Effective Ways to Get Out of Student Debt!

7 Little-Known But Effective Ways to Get Out of Student Debt!


Student debt in America is a $ 1.3 Trillion problem affecting millions of young lives. The rise of for-profit colleges, high tuition-fees & unemployment for recent graduates aren’t helping the problem in any way. If you are one of these unfortunate young graduates grappling with student debt, here are 7 simple and practical things to do.

Income-Driven Repayment Plans

If you have loan balance even after 20-25 years of income-driven repayment plan, then the balance is forgiven. However, do note that a long term plan might decrease your monthly payments but will increase your overall payment.

Public Service Loan Forgiveness (PSLF)

If you work in a public service job, you are eligible for Public Service Loan Forgiveness. You require 30 hours of public service per week over period of 10 years, you should have made at least 120 qualifying monthly payments and after 120th payment you can submit PSLF application.

Teacher Loan Forgiveness

If you are a teacher in low-income school, you are eligible for Teacher Loan Forgiveness. You can get up to $27,000 of Perkins Loan forgiven & $17,500 of Direct or Stafford Loan forgiven.

Perkins Loan Cancellation and Discharge

If you have Perkins loan, you can volunteer in Peace Corps or AmeriCorps Vista program, work in professions such as teaching, medicine, social service, and law enforcement or serve in the U.S. armed forces in a hostile area and get out of student debt.

False Certification of Student Eligibility or Unauthorized Payment Discharge

If you school made false certifications about your loan eligibility, sign your name or promissory note without your permission or endorse a loan check without your knowledge, fail to give you proceeds or put payment towards your loan, then you are eligible for this scheme.

Closed School Discharge

If by any chance your school closes before you finish your program, then you are eligible for Closed School Discharge. However, you must be enrolled when the school closes and have withdrawn from the school less than 120 days prior to its closing.

Total and Permanent Disability Discharge (TPD)

If you are receiving Social Security Disability Insurance or Supplemental Security Income or if you have a medical condition preventing you from engaging in any “substantial gainful activity” for the past 60 months or the next 60 months, or expected to result in death you are eligible for Total and Permanent Disability Discharge.

Unpaid Refund Discharge

If you withdraw, your school may owe refund to U.S. Department of Education or lender. In case the school fails to provide refund, you are eligible for a discharge.

Discharge in Bankruptcy

You can also use Chapter 7 Bankruptcy to get out of student debt. This wont be easy, but this could be a final last resort step.

Death Discharge

Since we are discussing all the possibilities, this is on the list. If the borrower dies, the loan is discharged and the same is applied for parents who have PLUS loans. If the parent dies, or the student, the loan is discharged.



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