The burden of student loans is a growing problem that has dominated national media in recent years.

Borrowers owe a total of $1.75 trillion, averaging out to almost $29,000 per student. Even if a graduate can secure work in their field after graduation, student loan payments can cripple their ability to live on their own, save for a home, and provide for their family. For those who are unable to work in their field of study, student loans are an overwhelming financial burden that has no benefit at all!

Many people believe that student loan discharge is impossible, or at least too difficult to be worth trying. For the last 40 years, that was true. But everything changed in October of 2022! That’s when the Department of Education issued new guidance making it easier than ever to eliminate federal student loans by using bankruptcy.

For most people, discharging student loans in bankruptcy will be the best option available. We’ve described a number of other alternatives below, but most of the non-bankruptcy options are extremely specific and won’t apply to 99% of student loan borrowers. For that reason, it’s extremely important to find out whether bankruptcy can help you with your student loans.

Learn more about student loan discharge options at the national level and in Oklahoma, and to find out how we can help you, call Convenient Bankruptcy at 405-296-0079.

Understanding Student Loan Discharge & Debt Relief

While you may hear people use the terms discharge, forgiveness, debt relief and cancellation interchangeably when referring to student loans, they actually cover very different ways to terminate your student loan payments. Note, though, that the Department of Education uses all of these terms to refer to the variety of programs they offer, so you should look closely at the terms and conditions of each program.

Student Loan Bankruptcy Discharge is a new option we can explore on your behalf. If you file for bankruptcy and want your student loans discharged in the process—historically a nearly impossible endeavor—you may be able to do so by filing a lawsuit against the Department of Education.

Your student loans will never be automatically discharged by filing a bankruptcy, but you are required to file a bankruptcy first. After your bankruptcy is filed, you will need to file a special adversary action against the student loan lender after you file your main bankruptcy case. Think of this as a special “bankruptcy lawsuit” — and if you win your lawsuit, you can qualify for full or partial discharge of your student loan debt.

During the lawsuit against the Department of Education, you and your attorney will assemble another set of financial paperwork, called a “borrower-attestation form.” This form sets forth and analyzes your income, your expenses, your student loan history, and your ability to pay your student loans — both now and in the future.

Upon completion of a borrower-attestation form, the Justice Department and Department of Education will look at your information to figure out if your loans qualify for discharge based on your hardship. They will then make a recommendation to the bankruptcy judge about whether your student loans should be discharged. This bankruptcy lawsuit against the Department of Education will give you a chance at a completely fresh financial start!

Student Loan Non-Bankruptcy Discharge is completely different. This is an option when you have highly unusual circumstances that warrant discharging your loans.

There are some very specific reasons the federal government may discharge your student loans outside of bankruptcy, including:

• Your school closed while enrolled or shortly after you withdraw (closed school discharge);
• Your school misled you or engaged in misconduct (borrower defense discharge);
• Your school falsely certified your loan eligibility (false certification discharge); or
• You are Totally and Permanently Disabled (TPD discharge).

Student loan cancellation may be available if you work in the public sector for a set period of time and make the minimum number of payments. There are specific programs in place for student loan cancellation, including Perkins Loan Cancellation and Perkins Loan Teacher Cancellation.

Student loan forgiveness is similar to cancellation in that it is awarded to those who work in the public sector and make an approved number of payments. However, it is also available to those who utilize the Income-Driven Repayment plan. Available programs include Public Service Loan Forgiveness and Teacher Loan Forgiveness.

Loan forgiveness options depend largely on how long ago you graduated. If you utilize the SAVE/REPAYE Plan, Pay As You Earn, Income-Based Repayment, or Income-Contingent Repayment, your loans may be forgiven after 20 to 25 years of qualifying payments.

One of the largest student loan forgiveness programs is Public Service Loan Forgiveness. Those who work for qualifying governmental agencies or nonprofit organizations may have their loans forgiven after 120 on-time payments with an Income-Driven Repayment plan.

Death: You may notice that one of the reasons that you may have your student loans discharged is your death. This is a big issue with student loans—while other types of debts eventually drop off or are discharged in bankruptcy, student loans can truly stick with you until death. It’s an issue that has caused entire generations to struggle financially for far longer than the generations that preceded them, so it’s no surprise that younger generations are beginning to push back against the permanence of student loan debt. There are lawsuits alleging mismanagement of student loan payments, miscalculations of payments, and other issues.

Oklahoma Student Loan Discharge Programs

In addition to federal options available to Oklahoma borrowers, there are state-specific programs to explore. If you are a physician assistant working in Oklahoma, you can look into the Physician Assistant Loan Repayment Program. You must work in specific areas of Oklahoma to qualify. A similar program helps physicians get set up in rural areas. The Physician/Community Match Program provides forgivable loans to those who work in approved rural areas. A similar option for Oklahoma dentists is the Oklahoma Dental Loan Repayment Program. Graduates working as public defenders or prosecutors in Oklahoma may qualify for the John R. Justice Loan Repayment Program, although this is not unique to Oklahoma.

Additional Considerations and Resources

As you explore different options to free yourself of student debt, make sure you work closely with a trusted attorney. If you’re looking into bankruptcy plus a lawsuit against the Department of Education, working with a bankruptcy attorney allows you to present the strongest case you can for loan discharge. There are factors to consider with each type of loan discharge, forgiveness, or cancellation. You’ll need to find out if you’ve made enough payments if the unpaid loans are taxable as income, and any legal issues that are forthcoming. This is particularly important now when student loan lawsuits and laws are changing every single day.

You can also look into local resources and organizations that can help you stay connected and informed. Options include the Oklahoma Student Loan Authority, Oklahoma College Assistance Program, Oklahoma Money Matters, and Ready Set Repay. Stay up-to-date on ongoing lawsuits and legislation related to student loans, as you never know when these factors may affect your repayment obligations.

The team at Convenient Bankruptcy is also here to help you navigate your options and next steps. We’ve helped many borrowers just like you get out from under tens of thousands of dollars in student loan debt. Ready to discuss your options with our team? Call us at 405-296-0079 or send us a message online.