Student Loan Discharge: Top Programs and How to Apply

Aaditya Shah
Aaditya Shah

Aaditya is a freelance writer specializing in personal finance. With a passion for simplifying complex financial concepts, Aaditya provides practical tips and insights to help readers make smarter money decisions. Through his concise and informative articles, he empowers individuals to take control of their finances and build a secure financial future. His articles combine a conversational tone with actionable strategies, making them accessible and relatable to readers from all walks of life.

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Daniel Kahn
Daniel Kahn
Daniel is the co-founder and COO at Sparrow. Daniel is responsible for the day-to-day operations of a company, working closely with other members of the executive team to develop and implement strategies to support the growth and success of the company.
Daniel was a 2023 Forbes 30 Under 30 lister in the Education category.  Daniel was born and raised in Raleigh, North Carolina and graduated from Duke University in 2020.
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Camden Ford
Camden Ford

Camden leads Sparrow’s business operations – everything from product management to business analytics. After graduating Cum Laude from Duke University where he studied Civil Engineering, Camden worked as a Consultant for A.T. Kearney where he worked in their Strategic Operations practice. With a strong background in analytics, Camden strives to deliver data-driven conclusions and insights.

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November 10, 2023

If you’re studying in California, where 20% of discharge applications come from, student loan discharge programs may be familiar to you. However, the majority of borrowers haven’t heard of them.

While student loan forgiveness programs are more well-known, student loan discharge programs are another great way to have your student debt wiped from existence.

So, while student loan discharge programs are fairly unknown, shining a light on them is important as they could save you thousands of dollars. Let’s take a look at what student loan discharge programs are and the top programs you may qualify for.

What is Student Loan Discharge?

Student loan discharge programs remove your obligation to repay your debt. While similar to student loan forgiveness programs, discharge is typically only granted under extenuating circumstances. Forgiveness programs, on the other hand, are often granted based on your career or service to a particular industry.

For example, you may have your student loan debt forgiven after working in public service for a certain number of years, while your debt would be discharged for something like death or a disability.

Additionally, forgiveness programs are for federal student loans only, while both federal and private student loans are eligible for discharge (pending that you meet the eligibility criteria).

Top Student Loan Discharge Programs You May Qualify For

Closed School Discharge

As the name suggests, closed school discharge is aimed to remove the obligation for students whose school closed while they were still enrolled. To be eligible for a 100 percent discharge, you must meet the following criteria:

  1. You must have been enrolled in the school when it closed, or you were approved for a leave of absence when your school closed;
  2. If your loans were disbursed before July 1, 2020, then your school must have closed within 120 days after you withdrew; or
  3. If your loans were disbursed on or after July 1, 2020, then your school must have closed within 180 days after you withdrew.

If you find yourself in similar circumstances to these criteria, you could be eligible for the Closed School Discharge. In the case that you are eligible, the Secretary will automatically send you an application you can submit to your loan servicer. Or, you can contact your loan servicer directly about the application process.

Borrower Defense to Repayment Discharge

This program is provided to students who have attended schools that have either misled them, or participated in activities that violated certain state laws. For an application to be accepted, you must be able to demonstrate that the school violated state law related to your loan or to the educational services provided. If you believe this criteria meets your situation, you can fill out an application here

Total and Permanent Disability Discharge

The Total and Permanent Disability Discharge program (TPD) is for anyone who has become totally and permanently disabled. It relieves you from having to repay any federal loans. In order to qualify, you must provide documentation from one of the following sources:

  1. The U.S. Department of Veterans Affairs;
  2. The Social Security Administration; or
  3. A Physician

Many private lenders also offer this discharge, but make sure to contact your lender directly to verify. If you are unable to complete the application on your own, you are able to have a representative apply on your behalf and help throughout the TPD discharge process. 

Discharge Due to Death

If a student loan borrower dies during the duration of their student loans, it will be discharged. Likewise, a parent’s PLUS loan will be discharged if your parent dies. 

FAQ About Student Loan Discharge

What happens if your student loans are discharged?

According to the Department of Education, a discharge of federal student loans implies that:

  1. You will no longer be obligated to repay the loan,
  2. You will receive a reimbursement for any payments made either voluntarily or through forced collection, and
  3. The discharge will be reported to credit bureaus to delete any adverse credit history associated with the loan.

Essentially, your existing student loan gets deleted from your student loan account.

What is the difference between student loan forgiveness and discharge? 

Both student loan forgiveness and discharge programs have similar end results, however they are quite different in the technicalities. Loan discharge programs immediately stop the borrower from having to repay the student loans, whereas a student loan forgiveness program implies that the borrower must repay the debt until their application is approved or until the borrower meets the necessary criteria. Additionally, certain discharges entitle borrowers to receive a refund of previously made payments on the loan.

Are discharged loans removed from your credit report?

Yes. When your loans are successfully discharged, it will be reported to the appropriate credit bureaus to delete any student loan related credit history.

Final Thoughts from the Nest

Now, with this knowledge of discharge programs, you can be confident that you know the general landscape for any relief programs. If you do not qualify for any discharge programs, check your eligibility for student loan forgiveness programs.

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