Self-Help for Student Loan Borrowers: What to Do in Common Student Loan Scenarios
Are you a student loan borrower? Below are common situations you may find yourself in. For each, you will find general information and resources. This information is for your general use and is not specific legal advice. If you have specific legal needs, please contact Legal Aid.
BORROWERS are invited to call Legal Aid’s Economic Justice Information Line with questions about their student loans. They can call 216-861-5899 anytime, leave their question and contact info, and someone will call back within 2-3 business days.
Borrowers will need some basic information about their loans in order to understand the options. The most important: Do you have federal student loans? Borrowers could have federal student loans, federal loans and private loans, or just private loans. Almost all of the discussion below is focused on federal student loans.
Student Loans - FEDERAL or PRIVATE loan determination
- I don’t know what type of loans I have.
Your first step is to figure out if you have federal or private student loans. Federal student loans are those issued by the federal government or supported by the federal government. These can be loans that you took out yourself or that you borrowed for a child or grandchild. In contrast, private student loans are those issued directly by a private organization, like a bank or a school.
If you have your “Master Promissory Note” – that is, the contract you signed when you first took out the loan – you can use that document to figure out your loan type. If you don’t have the Master Promissory Note, you have two options.
First, you can log on to studentaid.gov to see if you have federal student loans. On the website, you can log in with your FSA ID (this is the same login information that you would have used to file their FAFSA application). Once logged in, you will see a dashboard with information on any federal student loans that you have. This website will only have information related to federal loans.
Second, you can obtain a free credit report from annualcreditreport.com. Generally, the report will list all of your student loans, including both private and federal.
- I have private student loans but cannot afford repayment
Unlike federal loans, there are no standard repayment plans for all private student loan borrowers. Instead, your contract with the lender will determine whether you have other options. Some private lenders will provide various repayment plans and will work with you if you need assistance.
For more information on private student loans visit National Consumer Law Center's Student Loan Borrower Assistance website.
For Borrowers who HAVE FEDERAL STUDENT LOANS and need help with payment options:
- I cannot afford the monthly payment amount on my federal student loans.
Most borrowers with federal student loans can sign up for an income-driven repayment plan that ties their monthly payments to their income. In fact, many borrowers are eligible for a plan with a $0 monthly payment. You must opt into such a plan and then confirm your income each year. After 20-25 years in such a repayment plan, the federal government will forgive the borrowers’ remaining debt.
Legal Aid's website has more information on income-driven repayment plans, and a guide on how to enroll in such a plan:
For Borrowers with FEDERAL STUDENT LOANS facing special circumstances (such as fraud) that may require legal assistance:
- I am disabled and unable to work and so cannot pay my federal student loan bills.
You might be eligible for discharge of your federal student loans. Federal law provides borrowers who are “totally and permanently disabled” a discharge in some circumstances, including if you have been on social security disability insurance for at least five years, or if you will remain on social security disability insurance for at least five years in the future. The Department of Education is working to try to automatically discharge the debt. Borrowers can also apply with an application that includes information from their doctor.
You can learn more here: Total and Permanent Disability (TPD) Discharge (disabilitydischarge.com)
- The school I was attending closed, but I still have loans from the program.
You might be eligible for discharge of your federal student loans. In most situations, federal law provides borrowers who were attending a school when it closed, or who withdrew from the program within 180 days of the closure, a “Closed School Discharge.” While the Department of Education is trying to automatically provide the discharges, some borrowers will still need to apply.
For more information on Closed School Discharges, please visit: Student Loan Cancellation: Closed School (studentloanborrowerassistance.org).
- I have federal student loans, but my school lied to me about the program.
You might be eligible for discharge of your federal student loans. Federal law provides borrowers with a “Borrower Defense to Repayment” if your school engaged in certain bad acts (such as lying about job placement rates, falsely guaranteeing employment, and misrepresenting the transferability of credits). Borrowers can apply to the Department to have their loans discharged under the Borrower Defense to Repayment regime.
The Department of Education has information about Borrower Defense to Repayment here: https://studentaid.gov/manage-loans/forgiveness-cancellation/borrower-defense. For more information on Borrower Defense to Repayment, please see Borrower Defense FAQs — Project on Predatory Student Lending (ppsl.org).
- I never took out the federal loans in my name.
You might be eligible for discharge of your federal student loans. Federal law provides borrowers with a “False Certification” discharge in various situations, including when they are the victim of identity theft or forgery.
For more information on False Certification discharges, please visit False Certification - Student Loan Borrowers Assistance (studentloanborrowerassistance.org).
For Borrowers with FEDERAL STUDENT LOANS who are eligible for specific programs, concerned about taxes, or who owe other debt:
- I received a discharge of my federal student loans; do I need to pay taxes on the amount discharged?
Under federal law, borrowers who receive a cancellation or discharge of their loans through 2025 will not have that amount considered taxable income for purposes of federal taxes. However, some states or local governments may treat the cancellation or discharge differently. If you are in that situation, you should consult with a tax expert in your area.
- I have various outstanding delinquent, defaulted, or unaffordable debts, including student loans.
Depending on the specifics of your situation, bankruptcy may be an option for you. Although bankruptcy has typically been a difficult path for student loan borrowers, the Department of Justice and Department of Education made changes that could ease the discharge of these loans through the bankruptcy process.
For additional information on discharging student loans through bankruptcy, please see: New Process to Discharge Student Loans in Bankruptcy | NCLC Digital Library.
Given the complexity of the bankruptcy process, we encourage you to reach out to Legal Aid if you are interested in exploring this option.
Updated January 7, 2025