Introduction

Private student loans are not easily wiped away. Unlike federal student loans, which have defined federal discharge or forgiveness programs, private loans are governed by the loan contract, the lender’s policies, and state law. This makes discharge rare, but not impossible. The practical pathways include total and permanent disability, bankruptcy (if a court finds undue hardship), borrower death (when the contract or state law provides), and cases involving fraud, forgery, or material misrepresentation by the lender or its agent.

This article explains each pathway, the evidence lenders or courts typically require, actionable steps to pursue relief, and alternatives to discharge. The guidance below reflects commonly used legal standards and industry practices current through 2025 and is for educational purposes only. For case-specific advice, consult an attorney experienced in student loan law.

Background: Why private loans are different

Federal loans are backed by federal law, and the U.S. Department of Education publishes clear processes for forgiveness, discharge, and administrative relief (see Federal Student Aid). Private student loans are contractual obligations made by banks, credit unions, or specialized student-lending companies. Terms for discharge, cosigner responsibilities, and borrower protections are set in the promissory note and state statutes. The Consumer Financial Protection Bureau (CFPB) explains that private loan dischargeability and options vary widely by lender and state (Consumer Financial Protection Bureau).

The limited, legitimate paths to discharge

1) Total and Permanent Disability (TPD)

  • What it is: Some private lenders permit discharge if the borrower is totally and permanently disabled. There is no uniform national rule for private loans, so eligibility depends on the contract and lender policy. Lenders commonly accept Social Security Disability Insurance (SSDI) award letters, long-term disability insurance documentation, or physician certification.
  • What lenders typically require: medical records, a treating physician’s statement, SSDI or VA disability award letters (if applicable), and completion of the lender’s discharge forms.
  • Practical notes: Many lenders use the federal TPD rules as a template but add extra paperwork or stricter benchmarks. Start by reviewing your promissory note and asking the servicer for their TPD packet in writing.
  • Internal resource: See our guide to medical discharges for documentation workflows and sample forms: Medical Discharge of Student Loans: Criteria and Application Process.

2) Bankruptcy (undue hardship)

  • What it is: Private student loans can be discharged in bankruptcy, but the borrower must file an adversary proceeding and convince a bankruptcy judge that repayment would impose an “undue hardship.” Many courts apply the Brunner test (a three-part test used in many circuits), though standards vary by jurisdiction and not every court uses Brunner.
  • What the Brunner-like formula asks: (1) the borrower cannot maintain minimal living expenses while repaying, (2) the hardship is likely to persist for a significant portion of the repayment period, and (3) the borrower has made good-faith efforts to repay the loans.
  • Practical notes: This is a challenging and fact-specific route. Borrowers typically need detailed financial records, tax returns, proof of job history, medical records if relevant, and evidence of repayment attempts. Consult a bankruptcy attorney who has experience with student-loan adversary proceedings.
  • Related resource: Our companion article on bankruptcy options for student loans discusses Chapter 7 and Chapter 13 strategies: Bankruptcy and Student Loans: What Rehabilitative Options Exist.

3) Fraud, Forgery, or Material Misrepresentation

  • What it is: If the loan was obtained through identity theft, forged signatures, or material misrepresentations by the school, lender, or broker, a borrower can seek cancellation. A court action or settlement frequently resolves such claims.
  • Evidence that helps: police reports or identity-theft affidavits, notarized statements, admissions of error from the lender or school, and internal loan documents showing inconsistent terms.
  • Practical notes: These claims often require an attorney, and timelines may involve statute-of-limitations issues under state law.

4) Death of the Borrower

  • What it is: Many private loan contracts include a death discharge clause that releases the borrower’s estate or the cosigner from further obligation if the borrower dies. Contract language varies—some lenders discharge the loan only for the primary borrower, not cosigners.
  • Practical notes: If you’re a cosigner, confirm whether you remain liable. See our article on co-signer outcomes after death or disability: What Happens to Co-signed Student Loans After Death or Disability.

5) Lender-Specific Hardship or Administrative Cancellation

  • What it is: Some lenders or servicers have rare internal hardship or cancellation policies for extreme circumstances (e.g., permanent institutional error, excessive collection abuse, or confirmed school closure/fraud). These are discretionary and won’t be in every contract.
  • Practical notes: File a detailed dispute and complaint with the servicer, then escalate to the lender’s ombuds or legal department. If the lender refuses, consider filing a complaint with the CFPB or your state attorney general’s consumer protection division (see Consumer Financial Protection Bureau).

Documentation checklist (what to collect before you apply or sue)

  • Complete promissory note and any co-signer agreements.
  • Full payment history and account statements showing charges, payments, transfers, and fees.
  • Medical records, SSDI/VA award letters, and physician statements (for disability claims).
  • Police reports, identity-theft affidavits, or forensic loan documents (for fraud/forgery claims).
  • Tax returns, pay stubs, bank statements, rent/mortgage statements, and evidence of expenses (for bankruptcy/undue hardship proceedings).
  • All written communications with the lender or servicer (emails, letters, recorded calls if legal in your state).

Step-by-step practical approach

  1. Read your loan contract and note any discharge or death/cosigner clauses.
  2. Contact the servicer in writing and request their formal packet and decision criteria (TPD forms, hardship review forms, or appeal procedures).
  3. Assemble the documentation checklist above; keep digital and physical copies.
  4. If you suspect fraud or forgery, file a police report and get an identity-theft affidavit.
  5. If bankruptcy may be an option, consult a bankruptcy attorney before filing; many courts require an adversary proceeding to seek discharge of student loans.
  6. If the lender denies relief, file a written complaint with the CFPB and your state attorney general’s consumer protection office.

Legal and practical considerations

  • Cosigner exposure: Many private loans include cosigner liability. A successful borrower discharge may not automatically release a cosigner; check the contract and get legal help.
  • Statute of limitations: Collection lawsuits for breach of contract are subject to state limitations periods that vary by state. Expired statutes may be a defense to a collection suit but rarely erase the underlying debt for credit-reporting purposes without court action.
  • Arbitration clauses and class actions: Many private loan contracts require arbitration and waive class-action rights. Arbitration rules differ from court procedures and may limit discovery. An experienced attorney can review arbitration clauses for carve-outs or unfair terms.
  • Consumer protections: File a complaint with the CFPB (https://www.consumerfinance.gov/) and consider notifying the lender’s regulator if the lender is a bank. Keep records of complaint numbers and follow up.

Alternatives when discharge seems unlikely

  • Hardship modification or settlement: Lenders sometimes accept reduced lump-sum settlements or hardship modifications to avoid long collection efforts.
  • Refinancing: If you have stable income or can qualify, refinancing to lower rates or payment profiles may improve cash flow. Refinancing typically eliminates federal protections and can affect cosigner obligations.
  • Forbearance/Deferment: Short-term relief to avoid default—but interest may continue to accrue and increase the balance.
  • Rehabilitation: If a loan is already in default, rehabilitation programs (if offered by the lender) can restore good standing and help preserve credit.

Real-world examples (anonymized)

  • Disability discharge: A borrower with catastrophic injuries was granted discharge after the lender accepted SSDI award letters plus physician statements. Careful documentation and persistence with the servicer’s medical-review department helped the case.
  • Undue-hardship bankruptcy: A lifelong disability and minimal earning prospects supported an undue-hardship discharge in one circuit court after an adversary proceeding. The process took two years and required extensive financial documentation.
  • Fraud/cancellation: A borrower discovered forged school signatures and a state investigation helped secure cancellation after subpoenaed records showed falsified enrollment documents.

Professional tips (from practice)

  • Document everything immediately. I have seen meritorious claims fail because key emails were deleted or never saved.
  • Get specialized counsel early. Attorneys who handle student-loan adversary proceedings, lender disputes, or consumer-finance litigation can guide evidence collection and procedural strategy.
  • Don’t ignore servicer notices. Respond in writing and keep copies. Failure to respond can foreclose administrative remedies.

Where to get help and authoritative resources

Final notes and disclaimer

Discharging private student loans is an exception, not the rule. The path you choose depends on your loan contract, state law, lender policies, and your individual circumstances. The information in this article is educational and current as of 2025. It is not legal advice. For guidance tailored to your situation, consult a licensed attorney or a qualified financial counselor experienced in student-loan matters.