When Do Student Loans Get Written Off?

Student loans can be a significant burden for many individuals, and understanding when they get written off can provide some relief. In many countries, student loans are not forgiven automatically at a specific age, but rather under specific conditions. This article will explore the different scenarios in which student loans might be written off, focusing on various countries and their policies.

United States: In the U.S., federal student loans are typically written off under the following conditions:

1. Loan Forgiveness Programs: Programs like Public Service Loan Forgiveness (PSLF) and Income-Driven Repayment (IDR) forgiveness can cancel the remaining balance of student loans after a certain number of qualifying payments or years. For PSLF, this is 120 qualifying payments (10 years) while working in a qualifying public service job. For IDR forgiveness, the term can vary—20 or 25 years of qualifying payments depending on the plan.
2. Total and Permanent Disability Discharge: If a borrower becomes totally and permanently disabled, they may qualify for a discharge of their federal student loans.
3. Death: Federal student loans are discharged upon the death of the borrower. In some cases, loans may also be discharged if the borrower’s death is due to an accident or incident that severely impacts their ability to repay.

United Kingdom: In the UK, student loans are written off based on either time or income. The terms are as follows:

1. Time-Based Write-Off: Loans are written off 25 years after the April you were first due to repay if the borrower hasn’t paid off their loan in full by that time.
2. Income-Based Write-Off: If the borrower is earning below a certain income threshold, any remaining loan balance will be written off 40 years after the April you were first due to repay.

Australia: In Australia, the Higher Education Loan Program (HELP) loans are written off based on income levels. If a borrower’s income falls below a certain threshold for a given period, the remaining debt may be written off. Additionally, HELP debts are written off when the borrower turns 65.

Canada: In Canada, student loans can be written off under a few circumstances:

1. Repayment Assistance Program (RAP): If a borrower is experiencing financial difficulty, they may qualify for RAP, which can lead to a reduction in payments or cancellation of part of the loan.
2. Bankruptcy: Federal student loans may be discharged through bankruptcy, but this typically requires that the borrower has been out of school for at least 7 years.

New Zealand: In New Zealand, student loans are written off in the following ways:

1. Time-Based Write-Off: Loans are written off 10 years after the borrower becomes eligible for repayment if they haven't repaid the loan in full.
2. Disability or Death: If a borrower becomes permanently disabled or dies, their student loans may be written off.

Understanding the specifics of when and how student loans can be written off is crucial for managing financial planning and expectations. Each country has its own set of rules and conditions, so it's important to consult the relevant policies and seek advice if you're unsure about your situation.