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Five Ways to Get Reduce or Eliminate Student Loan Debt

written by: Melanie•edited by: Wendy Finn•updated: 5/17/2010

Student loan repayment seems inevitable. You cannot discharge student loan debt even in a bankruptcy. However, there are five tried-and-true methods for discharging or neutralizing student loan debt, and savvy consumers can apply these methods to reduce student loan debt.

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    Death, Taxes, and Student Loans

    Nothing is certain but death, taxes...and student loan payments? Ben Franklin didn't live long enough to see student loan debt rise to record levels ($19,200 on average for graduating seniors), but his adage may as well include student loans. You can pay them down over ten, twenty, thirty--or more--years, but is there a way to reduce or eliminate them?

    Yes. But you may not like all the answers. Read on for more information.

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    1. School closure

    Did your school close before you were able to complete your degree? then you're not required to pay back the loans. All loans are cancelled, and you should not experience any credit issues as a result.

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    2. Death or Disability

    No one wants to die, of course, but be comforted knowing that when you die, your student loan debt dies with you. Your heirs, spouse, parents, etc. don't have to pay back your loans if you die beore you've paid them off.

    If you are disabled according to federal government standards, and receive government disability payments, then you generally can have your student loans discharged. You need to go through a formal hearing for this, and you need to have documentation showing that you cannot work.

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    3. You Were Lied To

    If an admissions officer at your college promised you that you would be able to be a pharmacist at the end of your program, but after one year you realize the course is just for a pharmacy technician, and not a pharmacist, you may have a case for getting loans discharged. If "false certification" takes place--you're told you will be certified for one thing, but you're not, or if the certification is illegally granted--then you may have a case.

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    4. Peace Corps or AmeriCorps

    Serve in the Peace Corps or in AmeriCorps and get nearly $5,000 per year of service knocked off your student loans. you only need to be 18 to join AmeriCorps, and you have a choice: $4,750 per year toward student loans OR toward tuition if you haven't yet attended college.

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    5. A Hardship Hearing: A Longshot

    Student loans are NOT discharged during bankruptcy...except sometimes they are. It's very rare, but there are a handful of circumstances that will allow you to discharge student loans as part of a bankruptcy hearing. Consult with a bankruptcy lawyer with student loan experience for more information.