How To Get Out Of Student Loans

Learn how to get out of student loans legally and make loans cheaper with loan repayment options and loan forgiveness programs. Also, read different ways to discharge your loans in this article.

Updated by C Laltlanhlua on 15th November 2019

If you are struggling to make your monthly student loan payments, you are not alone. Many borrowers are able to manage their repayments, while a huge chunk of them are struggling to even pay the bare minimum. There could be countless reasons why.

Regardless of the cause of your struggle, there are ways to get relief, if not for all, but for a part of your student loan. There are several steps you can take - from ways to making your loan cheaper by reducing the interest rates, to opting for the forgiveness of the entire outstanding loan amount. We will discuss ways to pay lesser in a manageable manner.

However, not everyone will be eligible for these programs. Your past repayments, your employment, and your current credit score will be the factor paying the major roles in defining whether you will be eligible or not.

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Getting out of student loans

Getting out of student loans is never easy. It would only be fair if you pay it back the way you promised in your Master Promissory Note.

On the other hand, several situations are out of our hands. Your struggles with your loan payments may have never been your fault to start with. You may have had an accident that leads you to be unemployment, you may have faced serious health issues that not only restricted you from working but dipped your financial situation because of heavy medical expenses, the school you enrolled in somehow failed to grant you your degree, or it may be due to several other inevitable circumstances.

If you have genuine reasons like the ones stated above, you need not worry. The Federal Direct Loan provides several protections for borrowers who may fall into such tragic situations.

Before we dive into all the available plans and programs of this sort, let us first look into ways of reducing the loan amount and/or monthly payments and managing multiple loans.


1 - Changing repayment plans

It may not seem much, but changing your repayment plans can reduce your financial stress very effectively. For federal loan borrowers, if your monthly payments are too high compared to your discretionary income, you can opt for one of the Income-Driven Repayment Plans.

If you need to pay off your loan faster, you may opt for the Standard Repayment Plan. You may also choose any of the other options to suit your financial needs. All you have to do is contact your respective loan servicer. 

Depending upon the type of loan you have taken, your eligibility for a repayment plan will differ. The list below shows several repayment plans for federal student loans.

  • Standard Repayment Plan

  • Graduated Repayment Plan

  • Extended Repayment Plan

  • Revised Pay As You Earn Repayment Plan (REPAYE)

  • Pay As You Earn Repayment Plan (PAYE)

  • Income-Based Repayment Plan (IBR)

  • Income-Contingent Repayment Plan (ICR)

  • Income-Sensitive Repayment Plan

For private student loans, the repayment plans vary widely for lenders. The majority of the top financial institutions offer flexible repayment plans. Kindly contact your lenders to learn more about the options you have.

2 - Loan consolidation programs

Consolidation is the process of combining multiple small loans into a single loan. All federal student loans can be consolidated under the Direct Consolidation Loan Program. The new interest rate of the consolidated loan will be the weighted average of the combined interest of all the previous loans.

Some of the features of consolidation are - 

No fees - Consolidating federal loans do not require any fees.

One single payment - It is very helpful for borrowers with multiple loan servicers. After consolidating your loans, you will have to make payments to only a single loan servicer instead of paying to multiple servicers for every month. It is one way of relieving your stress.

Decrease monthly payments - When you consolidate your loans, you may have a chance to increase your loan terms which will reduce your monthly payments. It will reduce the stress of needing to manage your payment but it is important to note that this will increase the overall amount of the loan.

Before consolidating your loans, always weight the pros with the cons as you may lose several benefits that come with your current loan if you consolidate them.

3 - Loan refinancing programs

Refinancing is a process of revising and remodeling the existing loan agreement into a new agreement. The refinanced loans may have lower interest rates, change in loan terms, and more. These changes in the agreement should ultimately reduce your financial stress.

Refinancing is done by private lenders only, the federal government does not have a refinancing program. The idea of refinancing stems from the fact that after you have made multiple eligible on-time repayments, your credit score would have increased. This change in your credit score might make you eligible for a better, lower interest rate compared to your previous rates, or any other changes that you may be eligible, which you previously were not.

In addition to lowering your interest rates, refinancing also allows you to consolidate loans. Multiple loans, a combination of private and federal loans, can be refinanced into one loan. If federal loans are refinanced, all the benefits like forgiveness, discharge, and more of the loan will be nullified. Your federal loan will now be converted into a private loan.

4 - Loan forgiveness programs

Forgiveness is the process through which borrowers are excepted from paying some or the entire amount of the loan they borrowed, provided that they are eligible under one of the programs. Federal Student Loans offer two forgiveness programs, each program having their individual eligibility criteria.

If you are eligible for any one of the following programs, or you believe you may be eligible, you must contact your loan servicer. They will help you proceed further to have your loans forgiven.

Public Service Loan Forgiveness - This program is for eligible borrowers who are employed to eligible employers in the public sector for at least 5 years. 

Teacher Loan Forgiveness - This program is for eligible borrowers who are employed at eligible schools.

For private student loans, forgiveness is only offered by a few lenders under strict criteria. Kindly contact your lender or servicer to know more about it.

5 - Loan discharge programs

Discharge is the process through which borrowers are excluded from paying some or the entire amount of the loan they borrowed, provided that they are eligible under one of the programs. Federal student loans offer several loan discharge programs, each program having their individual eligibility criteria.

If you are eligible for any one of the following programs, or you believe you may be eligible, you must contact your loan servicer. They will help you proceed further to have your loans discharged.

  • Total and Permanent Disability Discharge

  • Death Discharge

  • Closed School Discharge

  • False Certification Discharge

  • Unpaid Refund Discharge

Forgiveness is an exemption made due to the kind of employment borrowers are in, while Discharge is an exemption made due to other circumstances.

6 - Bankruptcy discharge program

In times of dire situation where borrowers hit the ultimate bottom in finances, they may get an attorney to file for an adversary proceeding in bankruptcy court. You would be required to file chapter 7 and 13  bankruptcy and prove that your loans will impose hardships on you and people who depend on you.

Your loan lender is allowed to challenge your claim in court. The bankruptcy court will investigate your case to see if your claims are true. Your previous effort to repay your loan will also play a huge role in the investigation.

The ultimate decision of the court will vary from case to case. The discharge may be done partial or for the full amount of the remaining of the loan. Your claim may receive change in loan terms alone or it may even be rejected.


Student loans play a huge part of the education system in America. It has done a great deal of a job in aiding students who are in need of financial help. Many students have received their education because of student loans alone, which they might not have otherwise.

However true it may be, that student loan is a life-saver, it also imposes great risks on the future of many borrowers. We have seen many cases where the livelihood of borrowers is completely ruined because they have taken student loans in the past which they cannot afford to repay.

As we have discussed, getting out of student loan is not impossible but not always easy. So, make your decisions carefully before you request for student loans. Do not jump into financial aids without familiarizing yourself with every detail of the terms and conditions in order to avoid the unwanted and unnecessary financial situation. Only take the amount of loan that will be needed, and use your loans only in places they are meant to be used, that is for your education.

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Frequently Asked Questions

  • 1.How could my student loans be forgiven?

    Student Loans could be forgiven after a certain time-period of simultaneous repayment on the basis of income plans. These plans fall under Federal student aid of the US government.

  • 2.Can student loans be negociated?

    It's a variable condition because it totally depends on the department of education as the department could settle the loan amounts in most possible cases. It also depends on the borrower's choice.

  • 3.Can interest-rates on federal student loans be negotiated?

    No, the interest rates on federal student loans can not be negotiated as per laws. The rates of interest are fixed by Ministries of the US government that cannot be altered at any cost.

  • 4.How long will my defaulted student loan worry you?

    Defaulted student loans don't haunt you for long or forever, normally it falls off credit reports after seven and a half years from the time period of repayment defaults.

  • 5.Is any New Loan Forgiveness Programme introduced?

    Public Service Loan Forgiveness Programme (PSLF) has been introduced as a New Loan Forgiveness Programme. It aims in college cost reduction and reduces the debt of the borrowers via its versatile programmes.

  • 6.Can student loans history be removed from any borrowers credit history?

    No, there is no such rule or records to remove student loan history from any borrower's credit history. Any activity or trail can result in serious charges under Us government and even it could also lead to cancellation of citizenship.

  • 7.Should interest rates on loan be paid on grace period?

    It depends on the terms and conditions of the loan the borrowers signed, if they wish to pay beforehand then they should talk to there lenders and get their schedules accordingly as it is good to do so.