Question:
Dear Steve,
I was enrolled at the University of Phoenix’s master program for early childhood education. I was forced to withdraw due to my state’s DCFS daycare regulations preventing me from completing my course work, completing my degree, and working in my chosen field.
I understand there was a failure to benefit clause in my original loan paperwork. Is there someone who can help me through the red tape to have my loan discharged before I lose anything more? I have already lost my 15-year teaching career and am physically unable to do the job even if I could go back.
Elizabeth
Answer:
Dear Elizabeth,
Like so many other things in life, it’s complicated.
Student loans are not dependent on you finishing your degree, they are for services rendered that semester.
Student loans are a hope that you will be able to complete the degree. But a surprising statistic is that about 75% of people with student loans never finish.
If these are federal student loans then you might be eligible for a disability discharge if you are permanently disabled. There is a process to accomplish that.
If these are private student loans then any options will come with some financial pain.
In the past, I’ve written about the “failure to benefit” issue you mentioned.
More details on how this forgiveness works can be found here.
But as I said in that post, “But before you start jumping up and down to celebrate, there is a bit of a disclaimer here. This only applies to people who were enrolled and took out federal student loans for courses of study that required a GED or high school diploma in order to benefit from the program.”
That doesn’t sound like it applies to you in your situation.
So if you are not permanently disabled, then we’d have to look at one of the Income-Driven Repayment programs for federal student loans. And as I said, if these are private student loans then it gets very tricky.
While I am always impressed by the tremendous skill and talent of my friend, debt coach Damon Day, you should contact someone who is an independent debt coach to arrange a consultation for some specific advice on what strategies can be considered for this difficult situation.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
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