 Student
loan forgiveness: Rare, but possible
|  Dear
Debt Adviser,
How long can they pursue a student loan debt (from six years ago)? Does it have a statute of limitations? Thank you.
-- Carlos
Dear Carlos,
Perhaps you have heard the expression that nothing is
certain except for death and taxes. Well, student loan debt is just one step behind
owing the IRS on the ladder of debt longevity. And the IRS is only below St. Peter
when you meet him at the pearly gates! (Although IRS agents do get into heaven,
they lack jurisdiction there!) After all, the government either provides or secures
the funds for student loans, so having to repay them should be no big surprise.
To
answer the question you asked, no, student loans do not have a statute of limitations.
Under most circumstances, you must repay the loan. Partial or full discharge or
forgiveness of student loans is possible. My learned friends at the California
Bankruptcy Attorneys tell me that there is still a limited discharge right with
respect to student loans for a "hardship." The kindly attorneys sometimes
refer to this as the "iron lung" discharge because in their experience,
unless you are expecting to be in an iron lung the rest of your life, it is unlikely
that you will get the discharge of your student
loan. The court will need to be convinced that not only
your present income but also your income for a long time to come will prevent
you from paying the loan back. Permanent disability may give you a chance at this.
If you go this route, check with an attorney. I am not now nor have I ever been
accused of being an attorney, and this is definitely a situation where you want
get a legal opinion on which to rely. Additional information
on the limited circumstances under which you can dodge a student loan can be found
at the U.S. Department of Education's student loan site. A summary of those circumstances
follows.
 |
Paying down, discharging or canceling student loans: |
|
|
| • | Volunteer
work: AmeriCorps (domestic arm of the Peace Corps) or the Peace Corps both
offer education awards that can be used for tuition or to pay off student loans.
Americorps will award $4,725 for a year's worth of successful service. Peace Corps
will cancel 15 percent of the debt owed on Perkins loans for the first two-year
term and 20 percent for third and fourth years of service. For more information
visit the Peace Corps Web
site. | | • | Military
service: Those serving in the Army National Guard may be eligible to receive
up to $10,000 through the Student Loan Repayment Program. Check with a local recruiter
to determine your eligibility. | | • | Career
choice: Teachers who teach in schools that serve low-income students, have
a shortage of teachers in a particular subject or teach disabled students in a
public or nonprofit school are eligible for up to 100 percent of loan discharge. |
| | Legal
and medical professions have programs for student loan debt forgiveness. Visit
the Equal Justice Works Web site to get the facts on what you will have to do
in the legal world. | | | The
National Health Service Corps offers forgiveness programs to doctors who practice
in regions that lack adequate health care. In addition, some hospitals and private
health care facilities recruit candidates by dangling loan forgiveness. |
| • | Death
and other: Permanent disability or death will allow for 100 percent forgiveness
of your loan, but obviously have serious downsides that limit their popularity.
If your school closes before you can complete your program of study or you were
issued a false loan certification, the loan is 100 percent forgiven. |
|
Carlos, when I was a youth in college,
the pledge-master at Lambda Chi had a saying I heard more than once. He said,
"If you want to play, you have to pay!" Buckle down and do the right
thing: Pay off the loans! Good luck! The
Debt Adviser, Steve Bucci, is the president of Money Management International
Financial Education Foundation and the author of "Credit
Repair Kit for Dummies." Visit MMI
for additional debt advice or to ask a question of the Debt Adviser, go to the
"Ask the Experts" page. |
