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What Is Student Loan Forgiveness?

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Created on
May 16, 2023


What’s Inside

Student loan forgiveness is a scenario where all or a portion of a borrower’s outstanding student debt is discharged or cancelled. Forgiveness programs in the US serve as a means to relieve the burden of student loan debt which can become a source of stress on one’s finances. US student loan forgiveness is granted for various reasons like disability, bankruptcy, or public service.

Reasons for student loan forgiveness

Here are a few situations where US student loan forgiveness, discharge, or cancellation is viable.

Public Service Loan Forgiveness

If you are employed by the government or operate for a non-profit organisation, you can receive forgiveness under the Public Service Loan Forgiveness (PSLF) Program.

Closed School Discharge

If your academic institution closes while you are enrolled or soon after you’ve withdrawn, you may be eligible for discharge on your federal loan.

Total and Permanent Disability Discharge

If you are permanently and completely disabled, you might qualify for a discharge on your federal loans.

Discharge Due to Death

In the scenario of the death of the borrower or the student on whose behalf the loan was taken out, federal student loans are to be discharged.

Discharge in Bankruptcy

In rare cases, you can have a student loan discharged after you’ve declared bankruptcy. However, this process is not automatic.

Loan forgiveness for student loans can also apply in the scenario of a borrower’s defence to repayment, false certification of one’s eligibility for the loan, having an unpaid refund from your school, and being a victim of forgery.

What happens if I qualify for loan forgiveness

If you are eligible for complete student loan forgiveness, or discharge of your loan, you need not continue making any more payments. Alternatively, if just a part of your loan is forgiven, you are responsible for paying the remaining balance in your federal loan.

If you qualify for a student loan discharge, you might receive a refund of some or all of your payments towards your loan. Any negative credit information related to your delinquency may also be removed. If your loan defaulted, the discharge might clear its default status, making you eligible for federal student aid again, provided you have no other defaulted loans.


Student loan forgiveness is necessary to provide financial relief to borrowers saddled with student loan debt, create opportunities for underserved communities, and promote economic equity. However, many borrowers still require access to credit to fund other major life expenses, such as consolidating high-interest debt, buying a house, covering medical bills, and more.

An easy solution to this challenge is pre-approved personal loans whose flexible terms can help borrowers access the funds they need quickly and efficiently. Federal Bank provides instant loans that arrive directly via your account on Fi. These are pre-approved personal loans made available to select users with good credit scores.

On Fi, this process is 100% paperless, and the loans are provided at competitive interest rates — where each user remains in control with complete visibility of all details. Plus, you can avoid EMI late fees by setting up automatic in-app payments. Our licensed partner bank assigns an eligible loan amount to each user (up to ₹5 lakh).

Frequently Asked Questions

1. Is student loan forgiveness real or fake?

Student loan forgiveness is real, with multiple programs in the US offering this feature to borrowers. Based on one’s circumstances and the situation, a portion or all of one’s student loan payments can be forgiven, discharged, or cancelled.

2. Is student loan forgiveness private?

No, student loan forgiveness is a public governmental initiative offered by the Federal Student Aid Office at the US Department of Education. However, forgiveness does not apply to private loans, only to federal student loans.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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