To apply for the Closed School Loan Discharge program simply fill out the application and submit it to the people who service your loan.
The people who service your loan are the ones that send the money installment loans in West Virginia to via your student loan payments every month.
Every loan servicer has a different procedure in place for processing these applications, so you’ll need to find out what your servicer requires before you can determine how to proceed.
After you submit your Closed School Loan Discharge application, your servicer is legally obligated to inform you of their process, and then as long as you qualify for the discharge, and you follow their instructions on what to do next, you should get your debt fully forgiven.
Which Program is Better? Borrower’s Defense or Closed School Discharges?
I wouldn’t say that one program is better than the other. They will both discharge your student loan debt and both can possibly reimburse you for any payments that you’ve already made too.
Assuming that you qualify for both programs, however, I would choose the Closed School Loan Discharge program simply because the applications for the Borrower’s Defense program are taking so long to process.
Nobody wants to keep paying down a loan that shouldn’t exist in the first place, especially for a year or longer while waiting for a response from the Department of Education, so I would advise that you pursue the Closed School Loan Discharge if it’s an option for you.
However, it’s ultimately your choice. Read through the requirements for both programs carefully and choose the program that suits your particular situation best.
Will I Owe Taxes on Forgiven Debt?
Yes, any discharged student loan debt is considered income and therefore taxable by the IRS. That’s bad enough. However, it gets worse. The IRS is going to come after you for the money when you file your next tax return, and they’re not going to be as easy to deal with as your student loan servicing company.
Why? Because while your loan servicer lets you break out the debt you owe them into small, affordable monthly payments, the IRS is going to request that you pay them all at once, in a single lump sum.
Most people don’t have that kind of money lying around, and if you’re like most people, then you’ll need to work with the IRS and apply for their long-term payment plan in order to make this an affordable process, so don’t think you’re free and clear just yet, because that could be a difficult process too.
To put it in numbers, let’s say that you have $100,000 in student loan debt forgiven. If your taxable income is 30% that means that you will owe the IRS a whopping $30,000, and it means that they’ll want you to pay them that entire $30,000 all at once with you next tax return.
Since most people suffering under the burden of student loan debt don’t have that kind of money on hand I’ve created an entirely new website called Forget Tax Debt, which offers advice on dealing with IRS tax debt, just like I do here for Student Loans.
If you’re having trouble with taxes, or the IRS, then have a read through my new site, looking at articles on Filing Paying IRS Back Taxes, IRS Tax Debt Settlements, The IRS Fresh Start Program, and IRS Tax Debt Forgiveness.
Dated News from the Everest Case
NEWS ALERT: On Thursday, , Betsy DeVos’s Department of Education announced that they will begin immediately issuing $150,000,000 in Borrower’s Defense to Repayment Discharges. This is in direct response to a recent Federal ruling that DOE needed to terminate all delays in the BDAR approvals process.