6 Ways To Get Rid of Student Loans Fast
You have six main options to tackle overwhelming student loan debt: forgiveness programs like PSLF, discharge options for specific circumstances, income-driven repayment plans, refinancing, settlement negotiations, and bankruptcy. Federal loans offer more relief options than private loans, but both can be managed with the right strategy.
Get Free ConsultationStudent loan debt in the United States hit $1.75 trillion in 2024. Federal loans account for roughly $1.6 trillion of that total. Private student loans make up the rest.
Student loans follow unique rules that set them apart from other debts. Each relief option comes with specific eligibility requirements. You can find a path forward that works for your situation.
Qualify for Chapter 7 Student Loan Discharge?
Recent DOJ guidelines make it easier to discharge federal student loans through bankruptcy if you can prove undue hardship. See if you qualify for a fresh start.
Check Eligibility NowOption 1: Apply for Student Loan Forgiveness Programs
Many borrowers qualify for loan forgiveness programs. The Public Service Loan Forgiveness Program (PSLF) remains the most popular option. Teachers and healthcare workers can access specialized programs too.
Public Service Loan Forgiveness (PSLF)
Working in public service or for qualifying nonprofits opens doors to PSLF. You can lower your monthly payments through an income-driven repayment plan. Your remaining balance gets forgiven after 10 to 25 years.
You must meet all three qualifying criteria:
- Work for a U.S. federal, state, local, tribal government, or nonprofit organization
- Maintain full-time employment at one of these qualifying employers
- Have federal Direct Loans or consolidate other federal loans into a Direct Consolidation Loan
The program forgives your loan balance after you make 120 qualifying payments. Your payments must be made under an income-driven repayment plan.
Temporary Expanded Public Service Loan Forgiveness (TEPSLF)
PSLF requires careful planning around payment counts and repayment plan types. Many borrowers struggle with the complex administrative requirements. The government created TEPSLF to help borrowers who made payments under non-qualifying plans.
Check TEPSLF if you failed to make payments through a qualifying PSLF payment plan.
Teacher and Healthcare Worker Forgiveness Programs
Teachers, education workers, and healthcare professionals can access specialized forgiveness programs. These programs offer targeted relief based on your profession and service commitment.
Forgiveness vs. Cancellation: Understanding the Tax Impact
Loan cancellation means you no longer repay some or all of your loan. Perkins Loan holders may qualify for cancellation based on employment or volunteer service length.
The key difference lies in the tax treatment. Canceled loans typically create tax liability on the canceled amount. Forgiven loans through programs like PSLF usually don’t trigger taxes on the forgiven amount.
Option 2: Pursue Student Loan Discharge Programs
Student loan discharge provides debt relief through specific qualifying circumstances. You must meet strict eligibility requirements to qualify.
Total and Permanent Disability Discharge
You may qualify if you can prove total and permanent disability. Documentation must come from your physician, the Department of Veterans Affairs, or Social Security Administration. Send this proof with your discharge application to your lender.
You need to prove you can’t work due to a medical condition. Available treatment options may disqualify you. The program helps people with disabilities get meaningful financial relief.
Closed School Discharge
Your school closing while you’re enrolled full-time qualifies you for discharge. The same applies if closure happens immediately after you withdraw.
Death Discharge
Loans get discharged when a borrower dies. Submit proof of death to the lender. PLUS loan borrowers also qualify if the student they borrowed for passes away.
Other Discharge Options
Less common discharge programs can help in specific situations:
- False Certification Discharge: Applies when schools falsely certified your federal student aid eligibility
- Borrower Defense to Repayment Discharge: Available when schools made misleading statements that influenced your borrowing decisions
- Unpaid Refund Discharge: Applies when schools failed to refund lenders for periods you didn’t attend
Option 3: Switch Your Repayment Plan
After graduation and your grace period ends, you’re automatically placed on the Standard Repayment Plan. The 10-year repayment period often creates unaffordable monthly payments.
Federal student loans offer several repayment plan options to fit your budget. Private student loans provide fewer options. You may need to refinance to lower monthly payments.
Income-Driven Repayment (IDR) Plans
Four main income-driven repayment options exist for federal loans:
- Income-Based Repayment (IBR): For Direct Loans, federal Stafford Loans, PLUS loans, and Direct Consolidation Loans
- Income-Contingent Repayment (ICR): For Direct Loans, Direct PLUS loans (made to students), and Direct Consolidation Loans
- Pay As You Earn (PAYE): For Direct Loans, Direct PLUS loans (made to students), and Direct Consolidation Loans
- Saving on a Valuable Education (SAVE): For Direct Loans, Direct PLUS loans (made to graduate or professional students), and Direct Consolidation Loans (that didn’t repay PLUS loans made to parents)
Note: PLUS loans made to parents don’t qualify for IDR plans.
Graduated and Extended Repayment Plans
Neither the Standard Repayment Plan nor income-based plans work for everyone. Graduated Repayment Plans start with lower payments that increase over time. Extended Repayment Plans stretch payments over a longer period.
Option 4: Refinance Your Student Loans
High-interest unsubsidized Direct Loans, Graduate PLUS loans, and private loans are prime refinancing candidates. Refinancing means taking out a new loan to pay off existing student loans.
The right refinance loan can deliver lower interest rates and smaller monthly payments. You’re not guaranteed these benefits, but many borrowers see significant savings.
Option 5: Negotiate or Settle Your Debt
Most loan servicers only consider settlements after you default on student loans. Even then, most lenders won’t negotiate. Federal student loan servicers rarely settle.
Private student loan lenders may offer more flexibility. Refinancing often proves more viable than settlement for private loans. Consider all your options before defaulting intentionally.
Option 6: Discharge Student Loans Through Bankruptcy
Student loans combine with other personal debts to create overwhelming financial pressure. Chapter 7 bankruptcy offers a path to discharge federal student loans if you meet eligibility requirements.
The Department of Education and Department of Justice recently released updated guidance. These guidelines make the discharge process more efficient and accessible to borrowers.
You’ll need to file an adversarial proceeding after filing your bankruptcy case. You’ll also complete an attestation form. The form includes questions proving that repaying the debt causes undue hardship.
Want to explore bankruptcy for your student loans? Speak with a bankruptcy attorney for free to understand your options.
Bankruptcy Pros and Cons
Bankruptcy stops all collection activities through the automatic stay. Collection efforts like wage garnishments halt immediately. You’ll experience tremendous relief if financial stress overwhelms you daily.
Bankruptcy also helps you eliminate other debts. Credit card debt, medical bills, personal loans, and payday loans can all be discharged.
Your credit score may drop initially after filing bankruptcy. Housing, employment, and financial opportunities can be affected. Keep in mind that missed payments already hurt your credit score significantly.