What does it mean to have education loan debt discharged?

Both will eliminate your loan balance, but there are a few distinctions between them. Where student loan discharge usually occurs based on the borrower being unable to repay the debt, or having taken on the debt due to fraud, student loan forgiveness occurs based on the borrower’s occupation.

When you have your federal student loans discharged, it means: you no longer have further obligation to repay the loan, you will receive a reimbursement of payments made voluntarily or through forced collection, and.

How does a discharge of a student loan work?

Student loan discharge works by canceling your student loans so you no longer need to make repayments. It’s more common with federal loans than private student loans — though it’s generally not common at all. To get your student loans discharged, you typically need to fill out an application and have your lender or a government agency approve it.

Can a federal student loan be discharged in bankruptcy?

Student Loan Discharge. Under current law, it is almost impossible for students to get their private or federal student loan discharge in bankruptcy. When student loans are discharged, borrowers are no longer legally required to repay them.

What to know about student loan cancellation of debt?

What to know about Form 1099-C and cancellation of debt If you’ve received at least $600 in forgiveness for your student loans, you’ll be sent a Form 1099-C by your creditor. The student loan forgiveness form will include the following information:

Do you have to pay taxes on discharged student loans?

You’ll have to apply for student loan discharge and keep paying your loan until the right agency approves your application. However, note that canceled loans may still count as taxable income. Even though you won’t have to pay back your student loans, you might have to pay taxes on the discharged balance.