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Is Student Loan Cancellation The Right Approach For You?

student loan cancellation

Student loan debt is still a massive problem in 2020. It began from 2004 with $250 billion to $1.5 trillion in 2020. Now, when you complete your college degree, the first thought is to enroll in a student loan cancellation program. Student debt is one of the major national crisis that has put millions of students in a longer debt. 

According to Federal Student Aid, almost 42 million US citizens have student loans. That means, every person among eight people has student loan debts to worry about. If you acquire a good job, it can take you many years, sometimes a decade, to get out of any student debt. Unfortunately, there are no shortcuts to clear off your student debts. 

Some student loan cancellation programs can help you pay off your student loans altogether. But, no private or federal lender will assist you in canceling student loan debt without expecting something back. They will not help if they don’t have a reason for doing so. Even so, the student loan debt cancellation comes with its strict requirements. You have to follow the conditions before you clear your student debts. 

So, with all the apparent problems associated with the student loan debts, is the student loan debt cancellation the right approach for you? Before we answer the question, let’s look at the following issues with student and loan payments.  

Do You Have The Right Mindset Towards Your Student Loan Debt?

Calvin K. Kazanjian Economics Foundation’s director and Misericordia University’s president emeritus, Michael A. MacDowell, explained why the student loan debts are increasing on the Citizens’ Voice. In his explanation, he said that students and parents think they can find a way out without paying the money owed. In other words, they wait for a long time so that their loans will be canceled. 

He also stated that the attitude the students have in finishing their college degree affects their student debts. That means, if you take extra semesters, you’ll add to the total cost of your education. He suggests that students should have a detailed analysis of the student loans they acquire, project the employee’s annual income of the job they’ll end up working in, and plan on how to pay back their loan debts. 

Before you go in for a student loan cancellation program, you should have a payment plan through which you’ll use to get out of student debt. If you already have a loan debt to pay off, the best option is to seek advice from an expert. 

Is Student Loan Cancellation The Right Option For You?

student loan cancellation 

The answer is not a straightforward yes or no because it depends highly on your situation. The student loan debt cancellation is not simple to acquire. It comes with rigorous conditions for you to meet and also provide solid proof that you’ve met those requirements. 

If you want to cancel student loan debt because you don’t have a high-paying job, there’s a high chance that you’ll be rejected. So you must adequately understand the requirements which can make you qualify for the student loan cancellation program. Here are some of the conditions through which you can erase your student loan debt: 

You Can Cancel Your Loan Debt Due To A Disability 

If you provide a solid proof that you have a total disability, there’s a chance you can cancel your student debt. To eliminate your student loan, provide strong evidence from a medical professional showing that you’re disabled and can’t afford a regular monthly income. 

Also, provide a document that shows that you receive benefits because of your disability. It can be an ESA, SDA, DLA, or benefits from industrial injuries. 

Issues With Your Institution 

If you were not able to complete your program due to problems with the institution, you could be eligible for the loan cancellation program. The loan cancellation is not general, meaning that you won’t get a loan cancellation because you don’t like your institution. You can get your student loans canceled due to the following:

  • The school shut down while you were still in school 
  • If the school lied to you about their programs or if they violated some laws 
  • If your institution falsified your qualification to obtain a loan 
  • When your institution doesn’t return the funds to the loan lender. If that happens, the canceled loan amount will equal the supposed amount the institution had to return. 

Student Loan Cancellation As A Result Of Death

In case the loan borrower dies before paying off all outstanding loan debts, the federal government will cancel the loan. It’s not the best option to look out for, but it can help in certain circumstances. 

Cancellation Through Bankruptcy 

To get a cancellation through bankruptcy is very difficult, but it’s not impossible. You have to prove that your monthly loan repayment will bring hardship to you and your family. There are several ways to verify if what you’re saying is true. If you pass the test by successfully proving that you’ll go through undue hardship, the federal government will completely cancel your loan debts. 

So should you consider a loan cancellation program? 

Student loan debts can cause a severe financial burden after school. So, instead, take considerable time to find a loan program that fits your particular needs. We recommend doing a lot of investigations into different loan lenders, other student loan repayment options, and considering deferment. You can also pay off your student loans while in school. 

However, if you don’t want to take any loan cancellation, you can try other student loan discharge program. The income-share agreement is an alternative way to get rid of your student loans. Let’s talk more about the ISA 

Income-Share Agreement (ISA) 

student loan cancellationThe ISA popularity is gradually growing as an alternative to loan cancellations. The ISA refers to an agreement term between you and your institution. In the agreement terms, you accept to let your school fund your education, and in return, you repay the school from your salary after you graduate. Usually, you’ll only pay a percentage of your salary. The agreement terms are different for every university, but generally, the payback amount will increase if your income increases. 

The Wall Street Journal reports that a university will take from two percent to ten percent of your income. It will begin from five to ten years after you graduate from college and start a job. The ISA can provide you with flexible lower payments when you compare them with other student loans, that is, if you are not less fortunate in the job market. 

Before you proceed with the ISA, we recommend that you do a background check and cover all grounds. Lay all the potential options and have an expert determine the best option available. 

The ISA is worth investigating to know whether it’s ideal for your situation. If it’s not, there are other opportunities available for you to try out and quickly get out of student loan debts. If you don’t take the necessary steps, your student loans will affect your debt to income ratio


The student loan cancellation is possible under strict requirements. You may not be eligible. In that case, you can opt-out for other federal student loan forgiveness. But even though it’s a limited option, it can offer you the absolute way to get rid of your student loans. In other words, you can review the numerous student loan cancellation programs to find out if you’re eligible. In the end, you have to decide whether the loan cancellation program is the best choice for you or not. It depends on your current situation and your projected income. We recommend discussing the issue with a financial expert before making a decision. If you do so, you can quickly come out of your loan debt and be free from any financial burden.