Understanding Federal Student Loan Discharge Programs

Several federal student loan discharge or cancellation programs are available that offer relief to borrowers who meet eligibility requirements. It’s important to understand that these types of programs are different from the debt relief plan that the Supreme Court struck down.

While no program forgives student loan debt solely based on age or retirement status, older borrowers may qualify for one of the federal discharge programs to reduce student loan debt. This article provides a brief overview of each program and explains eligibility requirements.

Total and Permanent Disability Discharge  

Total and Permanent Disability Discharge is the most common form of federal student loan discharge available to older adults who are no longer working. Learn more about Total and Permanent Disability Student Loan Discharge or watch the Loan Forgiveness and Cancellation Programs webinar recording.

• Best For: Federal student loan borrowers who have a physical or mental health condition that prevents full-time work.  
• You are eligible if: 
  1. You are a veteran, and the U.S. Department of Veterans Affairs (VA) has determined you have a 100% service-connected disability.
  2. You receive Social Security Disability Income (SSDI) or Supplemental Security Income (SSI) benefits and you meet additional criteria.  
  3. You are not receiving formal disability benefits, but you are no longer working full-time due to a physical or mental health condition expected to last at least 5 years or is expected to result in death.  

• Tips and how to apply: Read our deep dive for more details about the requirements and how to apply. 

Public Service Loan Forgiveness (PSLF)  

The PSLF discharge program provides federal loan forgiveness for individuals working in qualifying public service jobs after making 10 years of payments.  

•  Eligibility Criteria:
  • You must have Direct Loans. If you’re unsure about your loan types, read our tips on how to find out or learn about the different types of federal loans in part 1 of the Aging with Student Loan Debt webinar series.
  • You must be enrolled in a qualifying Income-Driven Repayment plan while working in public service and making qualifying payments.  
  • You must make 120 qualifying monthly payments (roughly 10 years’ worth) while you are working full-time in a qualifying public service job. Payments do not have to be consecutive, and you can accumulate time across different qualifying jobs. 
• Important to know:
  • We recommend completing the Employment Certification Form (ECF) annually, regardless of position changes, if you are working in a qualifying public service job. You can also submit these retroactively if you need to count previous employment.
  • You must be working full-time in a qualifying public service job when you apply for PSLF forgiveness. Unfortunately, even if you’ve worked 10+ years in public service but didn’t apply for PSLF at that time, your loans cannot be forgiven under PSLF if you are retired or no longer employed. 
  • Student loan debt forgiven through PSLF is not taxable income for federal taxes.  
  • You can check the number of qualifying payments you’ve made by logging into your Federal Student Aid (FSA) account and going to the “My Aid” section. We recommend checking this regularly to catch any errors early. If you notice any errors, contact your loan servicer.  
• Tips and how to apply: The Department of Education’s PSLF Tool on studentaid.gov is recommended to process your ECF forms quickly. Check this regularly for errors.  

Income-Driven Repayment (IDR) Loan Cancellation

This program automatically cancels the remaining federal student loan balance for borrowers who have made 20-25 years of qualifying payments while enrolled in an Income-Driven Repayment plan.  

• Eligibility Criteria:
  • You must be enrolled in an Income Driven Payment plan like Pay As You Earn (PAYE), Income-Contingent Repayment (ICR), or Income-Based Repayment (IBR). Due to ongoing court challenges, enrollment in the SAVE program does not currently qualify for earning credit towards IDR loan cancellation.
  • You will need to make 20-25 years of qualifying payments while enrolled in a qualifying Income-Driven Repayment plan.  
• Important to Know: 
  • If you’ve qualified for a $0 monthly payment based on your income, this counts as a qualifying payment and earns credit towards IDR loan cancellation.  
  • Currently, student loan debt that’s cancelled through the IDR program is not taxable income for federal taxes; however, this will expire at the end of 2025.  
  • Due to recent legislation, this program faces significant change. 
• Tips and how to apply: This program is automatic, so you do not need to apply. However, you can check your progress towards the long-term IDR cancellation by logging into your FSA account and viewing the “My Aid” page, or by contacting your loan servicer to see how many payments you’ve made. We recommend checking this periodically and keeping records of your payment history. 

Death Discharge 

If a federal student loan borrower passes away, their student loans will be discharged. Discharge also applies to Parent PLUS borrowers if the student for whom the loan was taken out passes away. This means the debt is cancelled, will not need to be repaid, and does not pass to family members. 

• Process: The debt is cancelled once a family member or other representative provides the loan servicer with a death certificate. While this process is meant to be simple for those coping with the loss of a loved one, it can be helpful to include information for loved ones about any existing student loan debt and loan servicer details during estate planning.

Closed School Discharge  

This program provides federal student loan cancellation if you were unable to complete your degree because your school closed while you were enrolled, or if you withdrew from the school shortly before it closed.  

• How to apply: Download the application form from studentaid.gov or call your loan servicer to request an application. You’ll need to complete the form and submit it to your loan servicer.  
• Important to know: Federal student loan debt cancelled through the Closed School Discharge program is not currently considered federally taxable income.  

Borrower Defense to Repayment  

This program allows federal loan cancellation if the school that you attended engaged in misconduct, such as misleading you, lying to you, or failing to disclose important information to get you to enroll or stay enrolled.  

• Eligibility criteria: The Department of Education will automatically cancel federal loans for groups of students if it finds that a school engaged in widespread misconduct. For example, students who attended Corinthian Colleges between 1995 and 2015 qualify for an automatic group discharge.  
• Tips and how to apply: If you don’t qualify for an automatic discharge, you might be able to apply individually; however, you will probably need an attorney’s advice before proceeding to provide proof of misconduct.   

False Certification Discharge 

You may be eligible for this discharge program if you did not have a high school diploma or GED when you enrolled in higher education, or if you had a disqualifying status (e.g., criminal record) that prevented you from getting a job in the field you were studying.  

It’s important to know that this applies if the school improperly certified your eligibility for federal loans.  

• How to apply: There are different applications available depending on the specific circumstances on studentaid.gov. This discharge program is very complicated, and you may need an attorney to advise you on how to proceed.  

Identity Theft 

If someone forged your name on student loan documents or used your identity to take out student loans that you did not benefit from, you may be eligible for discharge. There are two types of identity theft discharge:   

• False Certification Discharge (Identity Theft): If a school employee used your identity to take out loans improperly. 
• Common-Law Forgery Discharge: If someone else, that is not a school employee, used your identity to take out loans. 
• How to apply: The forms are available on studentaid.gov depending on your situation. Identity Theft Discharge cases are very complicated, and you will likely need an attorney’s advice before applying.