How to Discharge Indebtedness of Student Loans

Students may be able to get relief from their student loans.

The average college student graduated with more than $23,000 in student loan debt in 2008, according to the Project on Student Loan Debt. Those students who struggle to find a high-paying job upon graduation might also struggle to pay this debt. Fortunately, these students can get help. They'll have to prove to the servicers of their student loans that they can't afford to pay their monthly student loan bills. This might then convince the servicers to discharge some or all of their loan debt.

Things You'll Need

• Copy of current student loan statement
• Copies of other loan statements, including car, home and personal
• Copies of bank savings and checking account statements
• Copies of two most recent paychecks
• Copy of most recent federal income tax return

Instructions

1. Make copies of the financial statements that you'll use to prove to your student loan servicer that you can't afford your monthly loan payments. These papers include your most recent federal income tax return, your last two paycheck stubs (if you have a job), savings and checking account statements, credit card bills, and additional loan statements.

2. Write a financial hardship letter that explains why you can't afford your student loan payments. You might have been unable to find a job after graduation. Maybe the only job you were able to land pays a low salary. Maybe your other debt is too high. Include in your hardship letter your request to have some or all of your student loan debt discharged.

3. Call the servicer of your student loan at the number included on your most recent loan statement. Explain to a loan specialist that you can't afford your student loan payments, and that you'd like to have all or some of your student loan debt discharged. Explain clearly why you can't afford your monthly payments.

4. Send your servicer by email, fax or traditional mail your financial hardship letter and the copies you made in Step 1. Your servicer will study these documents before deciding whether to eliminate your student loan debt.

5. Agree to a full or partial discharge of your debt if your servicer agrees to your request. Be aware, though, that it is extremely rare for a servicer to discharge all of your debt; this will only happen in the most extreme financial cases. Your servicer is more likely to eliminate some of your debt, reduce the interest rate on your loan, or lengthen the term of your loan. All of these solutions will result in a lower monthly payment. Make sure before agreeing to any of these fixes, though, that you'll be able to afford your new monthly payment.

References

• New York Times: Project on Student Loan Debt
• SallieMae: Managing Student Loan Debt
• Federal Student Aide: Discharging Student Loan Debt