Introduction
Private student loans can be a significant burden, especially when you’re struggling to make payments. Unlike federal student loans, private student loans don’t come with many borrower protections or discharge options. However, that doesn’t mean you’re stuck with them forever. In this guide, we’ll explore how to get private student loans discharged, including the discharge options available, eligibility criteria, and the steps you need to take to get your private student loans discharged.
How to Get Private Student Loans Discharged?
If you’re struggling to make payments on your private student loans, you may be wondering how to get them discharged. The discharge options available for private student loans are limited, but they do exist.
1. Total and Permanent Disability Discharge
If you’re permanently disabled and unable to work, you may be eligible for a total and permanent disability discharge. This discharge option is available for both federal and private student loans. To qualify, you must have a physical or mental impairment that makes you unable to work and earn a living.
To apply for a total and permanent disability discharge, you’ll need to submit a discharge application and provide supporting documentation, such as a statement from a physician or the Social Security Administration.
2. Bankruptcy Discharge
Filing for bankruptcy may also allow you to get your private student loans discharged. However, it’s not an easy process and requires you to meet certain eligibility criteria. To get your private student loans discharged through bankruptcy, you must prove that repaying your loans would cause undue hardship.
The undue hardship standard is difficult to meet and varies from state to state. Generally, to prove undue hardship, you must demonstrate that you’re unable to maintain a minimal standard of living while repaying your loans, and that your financial situation is unlikely to change in the future.
3. Closed School Discharge
If the school you attended closes while you’re enrolled or within 120 days of your withdrawal, you may be eligible for a closed school discharge. This discharge option is available for both federal and private student loans.
To apply for a closed school discharge, you’ll need to submit a discharge application and provide supporting documentation, such as your academic transcripts and proof of your enrollment or withdrawal.
4. False Certification Discharge
If your school falsely certified your eligibility for a loan, you may be eligible for a false certification discharge. This discharge option is available for both federal and private student loans.
To apply for a false certification discharge, you’ll need to submit a discharge application and provide supporting documentation, such as evidence that your school falsely certified your eligibility for a loan.
5. Death Discharge
If the borrower of the private student loan dies, the loan is discharged. The same is true for federal student loans. However, if there’s a cosigner on the loan, they may still be responsible for repaying the loan.
6. Settlement
If you’re unable to pay off your private student loans, you may be able to negotiate a settlement with your lender. A settlement allows you to pay a lump sum amount to settle your debt, often for less than what you owe. However, this option will likely negatively impact your credit score.
Eligibility Criteria for Private Student Loan Discharge
The eligibility criteria for private student loan discharge varies depending on the discharge option. Generally, to qualify for a private student loan discharge, you must meet specific criteria, such as being permanently disabled or attending a school that closed while you were enrolled.
