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It's possible to have your student loan debt discharged (canceled) or reduced, but only under certain specific circumstances:
- You die or become totally and permanently disabled.
- Your school closed before you could complete your program.
- For FFEL and Direct Stafford Loans only: Your school owes your lender a refund, forged your signature on a promissory note, or certified your loan even though you didn't have the ability to benefit from the coursework.
- You work in certain designated public school service professions (including teaching in a low-income school).
- You file for bankruptcy. (This cancellation is rare and occurs only if a bankruptcy court rules that repayment would cause undue hardship.)

Hardship discharge
Student loans are no longer dischargeable in bankruptcy just because they have been in pay status for a given period of time. The only way the loan can be discharged is by proving that repayment of the loan will create an undue hardship on the debtor/borrower and his family.

This standard is generally interpreted to mean that the debtor cannot maintain a minimally adequate standard of living and repay the loan. It usually requires a showing that the conditions that make repayment a hardship are unlikely to improve substantially over time. Many courts use the test for undue hardship found in the Brunner case.

Courts in some circuits will permit the judge to find that the debtor can repay a portion of the loan without hardship, and to discharge the balance of the loan.

To discharge a student loan in bankruptcy, the debtor must bring an adversary proceeding in the bankruptcy case. The debtor must prove at trial that repayment constitutes undue hardship.

This is an interesting article:

Assume for the purpose of this article that Alaska and Pennsylvania would apply the three-part Brunner test for a bankruptcy discharge of a student loan used by the bankruptcy court. First, the debtor must establish that she cannot maintain, based on current income and expenses, a "minimal" standard of living for herself and her dependents if forced to repay the loans. Second, the debtor must show "that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans." The third prong requires "that the debtor has made good faith efforts to repay the loans" [In re Pena, 155 F3d 1108,1111 (9th Cir. 1998)]

An appeal in the Brunner case:

Sounds like you might benefit from the advice of an attorney who's familiar with the details of your financial circumstances.

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