Student Loan Cancellation

I graduated from an online computer training school, and after getting a student loan for $28,000 I now owe $64,000 to Sallie Mae. I need to know what I can do. Some things that might help me hopefully are that the school promised me 5 years to utilize their Career Services Dept. after I graduated, which writes resumes and even gets you connected with good employers. But now Bank of America has pulled their funds and the school is closed down. While in the school the Career Services Director (there is only one per location) was fired and replaced by someone who wasn't competent enough to know that you should tell IT students about an IT job fair. I heard about that pay the principle thing, but I was told to make a full payment principle+interest the within the same payment period make another but this time write on the check "To the principle only" to cut down on time and to help my credit score. Is there really anything I can do or do I have to pay these detestable carrions the whole $64,000.

Comments for Student Loan Cancellation

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Jan 19, 2010
 Student Loan Debt
by: Gerri

I've said before that when student loans are good, they are very good. But when they are bad, they are really bad. Unfortunately, student loans do not offer the same consumer protections available on most other types of consumer loans. Most notably, they are extremely difficult to discharge in bankruptcy, which means that lenders have little incentive to negotiate.

There are some circumstance under which student loans can be canceled, including the following:

The following three school-related discharges apply to FFEL and Direct Stafford Loans only.

* You didn't have the "ability to benefit" from the coursework (false certification) ...
A Stafford Loan can be discharged if the school admitted you based on your ability to benefit from the training, but you weren't properly tested to measure that ability, or you failed the test. You might also be eligible for this type of discharge if you did not meet the physical or legal requirements of your state to enroll in the program or to work in the career for which you were training, regardless of whether you had a high school diploma or General Education Development (GED) certificate.If you had a high school diploma or GED when you enrolled in the program, you're ineligible for this discharge because those documents are sufficient to establish your ability to benefit from further training after high school. You may not be eligible for a discharge if you received a GED before you completed your program of study at the college or career school, or you completed a developmental or remedial program at the school.

The school owes your lender a refund ...
You might qualify for partial discharge of a FFEL or Direct Loan if your school failed to pay your lender a refund required under federal law. Only the amount of the unpaid refund will be discharged. You may qualify for this partial discharge whether the school is closed or opened. Contact your loan holder for more information.

Now here's the bad news:

Your loan can't be discharged solely because you believe the school:

* provided poor training or had unqualified instructors or inadequate equipment,
* did not provide job placement or other services that it promised, or
* engaged in fraudulent activities (other than falsely certifying the loan).

The previous points can be found at studentaid.ed.gov where you can find more information on handling student loan problems.

Unfortunately, unless one of the above circumstances apply, you may be out of luck. I would recommend you get a copy of the book The Student Loan Scam, and visit StudentLoanJustice.org for more information on coping with student loans.



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