Loan Deferment and Cancellation

Loan Deferment and Cancellation

A borrower may have a Direct, FFEL Program, or Perkins Loan deferred for at least half-time study at a postsecondary school; study in an approved graduate fellowship program or in an approved rehabilitation training program for the disabled.

A borrower may have a Direct, FFEL Program, or Perkins Loan deferred for up to three years for inability to find full-time employment; economic hardship.

A borrower may have a Perkins Loan (but not a Direct or FFEL Program Loan) deferred while he or she is engaged in service that qualifies for discharge or cancellation (see the Discharge/Cancellation Summary ).

Notes: For PLUS Loans and unsubsidized student loans, only principal is deferred. Interest continues to accrue.

Direct Loan borrower who have outstanding balances on FFEL Loans disbursed prior to July 1993 will be eligible for additional deferments.

The deferment provisions in this chart for FFEL Loans apply to loans first disbursed on or after July 1, 1993 to borrowers who have no outstanding FFEL Program Loan, Federal SLS loan or consolidation loan on the date they signed their promissory note.

The deferment provisions in this chart for Perkins Loans apply to loans first disbursed on or after July 1, 1993.

Many Peace Corps and VISTA Volunteers will qualify for a deferment based on economic hardship.

You must formally request a deferment through the procedures established by the holder of your loan, and you must continue making payments until you're notified that the deferment has been granted.

Discharge/Cancellation Summary

A Direct Loan or FFEL Program Loan can be discharged for the borrower's total and permanent disability or death. For PLUS Loans, this includes the death (but not the disability) of the student for whom the parents borrowed. This additional provision applies to any such student who dies on or after July 23, 1992;

  • Bankruptcy, if seven years have passed between the date the loan became due and the date the borrower files for bankruptcy (not counting deferment or forbearance periods). If seven years have not passed, cancellation is possible only if the bankruptcy court rules that repayment would cause undue hardship;
  • Closed school (if the school closed before the student could complete program of study). This provision applies only to loans received on or after January 1, 1986
  • False loan certification (school falsely certified student's ability to benefit or there is an unauthorized signature on the student's loan documentation). This provision applies only to loans received on or after January 1, 1986
 

A Perkins Loan can be discharged for:

  • the borrower's total and permanent disability or death;
  • bankruptcy, if seven years have passed between the date the loan became due and the date the borrower files for bankruptcy (not counting deferment or forbearance periods). If seven years have not passed, cancellation is possible only if the bankruptcy court rules that repayment would cause undue hardship.
 

A borrower can have up to 100% of his or her Perkins Loan cancelled if the borrower is

  • a full-time teacher in a designated elementary or secondary school serving students from low-income families. The borrower may also have the loan deferred;
  • a full-time special education teacher (includes teaching children with disabilities in a public or other nonprofit elementary or secondary school) service qualifies for deferment also;
  • a full-time qualified professional provider of early intervention services for the disabled; service qualifies for deferment also;
  • a teacher of math, science, foreign languages, bilingual education, or in other fields designated as teacher shortage areas; service qualifies for deferment also;
  • a full-time employee of a public or non-profit child- or family-service agency providing services to high-risk children and their families from low-income communities; service qualifies for deferment also;
  • a full-time nurse or medical technician; service qualifies for deferment also;
  • serving as a full-time law enforcement or corrections officer; service qualifies for deferment also;
  • serving full-time as a staff member in the educational component of a Head Start Program; service qualifies for deferment also.
 

A Perkins Loan borrower may have up to 70% of his or her loan cancelled for service as a Vista or Peace Corps Volunteer. The borrower may also have the loan deferred.

A Perkins Loan borrower may have up to 50% of his or her loan cancelled for service in the Armed Forces In areas of hostilities or imminent danger. The borrower may also have the loan deferred.