Loan Cancellation and Consolidation

Organization of Debt Prevention Activities

This document is organized using the Valencia College "Early Stages of Enrollment" approach, and describes the default prevention and debt management efforts of the Financial Aid Services Office at each stage of the borrower's loan:

Student Loan Debt Relief

On Aug. 24, 2022, the Biden-Harris Administration announced a Student Debt Relief Plan that includes one-time student loan debt relief targeted to low- and middle-income families.

The U.S. Department of Education (ED) will provide up to $20,000 in debt relief to Federal Pell Grant recipients and up to $10,000 in debt relief to non-Pell Grant recipients. Borrowers with loans held by ED are eligible for this relief if their individual income is less than $125,000 (or $250,000 for households).

Loans must have been first disbursed prior to June 30, 2022.

Loans borrowed for 2022-23 (fall 2022, spring 2023 and summer 2023) will not be part of the Federal Student Loan Debt Relief Plan.

Learn more about Student Loan Debt Relief on the U.S. Department of Education website.

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Watch out for scammers!

Per the Federal Trade Commission, "you don’t need to do anything or pay anybody to sign up for the new program — or the pause. Nobody can get you in early, help you jump the line, or guarantee eligibility. And anybody who says they can — or tries to charge you — is (1) a liar, and (2) a scammer." See more at FTC's Did you hear about the student loan annoucements? Scammers did too.

Borrower Defense Loan Discharge

If your school misled you or engaged in other misconduct in violation of certain state laws, you may be eligible for “borrower defense to loan repayment,” sometimes shortened to “borrower defense.” This is the discharge of some or all of your federal student loan debt.

You may be eligible for borrower defense regardless of whether your school closed or you are otherwise eligible for loan discharge under other laws. You will only be eligible for this type of federal student loan discharge if your school’s misleading activities or other misconduct directly relate to the loan or to the educational services for which the loan was provided.

You will not be eligible for this type of loan discharge based on claims that are not directly related to your loan or the educational services provided by the school. For example, personal injury claims or claims based on allegations of harassment are not bases for a borrower defense application.

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Closed School Discharge

If your school closes while you’re enrolled or soon after you withdraw, you may be eligible for discharge of your federal student loan. Loan discharge is the removal of your obligation to repay your loan under certain circumstances.

There are certain eligibility requirements to qualify for a closed school loan discharge; you must apply to get a discharge.

It’s important for you to obtain your academic and financial aid records if your school closes, since you might need those records if you plan to attend another school or want your student loans discharged.

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Disability, Bankruptcy, or Death

  • Your loan may be discharged if you are determined to be totally and permanently disabled and you meet certain requirements during a 3-year conditional discharge period. To apply for this discharge, you must provide a physician's statement that you became totally and permanently disabled after the loan was made. See your copy of the Borrower's Rights and Responsibilities Statement for more information on the procedures and conditions for this discharge.
  • Your loan may be cancelled if it is discharged in bankruptcy. This is not an automatic process — you must prove to the bankruptcy court that repaying the loan would cause undue hardship.
  • For a student who dies, the loan will be cancelled if a family member or other representative provides acceptable documentation to the student's servicer.

Contact your loan servicer for more information or to get a cancellation form. You can also find more information in your copy of the Borrower's Rights and Responsibilities Statement.


There may be advantages to consolidating (combining) your federal student loans into one loan, starting with the convenience of making a single monthly payment. Consolidation generally extends the repayment period, resulting in a lower monthly payment. This may make it easier for you to repay your loans. However, you will pay more interest if you extend your repayment period through consolidation since you will be making payments for a longer period of time.

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