Student Loan Discharge – How Long Does it Take to Remove Student Loan Debt From My Credit Report?
Student loan forgiveness usually depends on the student performing a certain act. Student loan forgiveness usually only applies if the student is working at a specific job for a specific period of time. Student loan forgiveness is also usually applied if the student is not eligible for the student loan because of dropout, school closure or fraud. It must be very apparent to the lending agency that the student can no longer afford to pay the amount owed.
There are many situations where a student has an option of applying for student loan discharge. First, the student must have a satisfactory grade point average which qualifies him for at least a partial forgiveness. The student must have at least two years of full time attendance at an accredited college or university and he must have not received any discipline action against him. Private student loans do not qualify for forgiveness. For federal student loans, relief is given to borrowers who have completed their first five years of college and who have on-time payments.
With the application of this form, the federal government considers the student to be in financial need. Relief will then be granted for up to two-fifth of the total amount owed. This means that a borrower may expect a check from the government in the amount of his loan repayment assistance. To apply for student loan discharge, one must visit a Direct Loan Servicing Center.
There are two types of loan forgiveness: personal and public. Private student loans can have both types of discharge. A borrower who has applied for and obtained a discharge will no longer be obligated to pay the balance of the loan after the period of service ends. The payment will start anew with a new loan payment and interest rate. Borrowers with personal loans may request a discharge based on their income. They must apply for forgiveness and then wait for the approval.
However, there are a number of conditions which a borrower must meet before he or she can qualify for discharge of his or her student loans. First, a borrower must not own any property that he or she can sell to repay his or her loans. Second, a borrower must not owe any more than six months of the total amount of his or her loans. Thirdly, a borrower must be able to prove that he or she is in financial need. Finally, he or she must provide proof that he or she will not be able to continue paying the remaining balance of his or her loans after the specified period of discharge.
There is also another type of student loan discharge, which may be applied for by a borrower who was discharged as a result of bankruptcy. This is called the “closed school discharge.” This discharge does not require the student borrower to have been out of school for at least five years. All that is required is that the student borrower has dropped out of school for six consecutive months and that he or she has not enrolled in any college or university for six consecutive months. The discharge is granted on an “as needed” basis and lasts for two years.
A borrower who is eligible for cancellation but whose loans have already been discharged may request a pardon or extension of the sentence. A pardon is granted when the sentence has become final. Extending the sentence is not considered. In either case, the forgiveness or extension is granted at the discretion of the judge. Loan forgiveness or extension does not have a credit rating impact.
If the borrower qualifies for forgiveness or extension, the new repayment terms should be applied to the date of discharge. In most cases, a borrower cannot apply for forgiveness until his or her federal student loans are fully paid off. After this point, any outstanding balance must be repaid. This can be done in one of two ways, through new repayment arrangements, or by changing the lender to another loan provider.