Alternative Documentation of Income (ADOI)

Borrowers seeking to certify income using documentation other than a federal tax return report receiving inconsistent or inaccurate information. Borrowers who do not file federal tax returns or whose most recent tax return does not accurately reflect their current financial circumstances are permitted to submit alternative documentation of income (ADOI). The Department of Education only […]

Annual Review of Financial Circumstances

With all income-driven repayment plans, the loan holder reviews the borrower’s financial circumstances to recalculate the monthly payment amount each year. Servicers must require borrowers to submit annual income documentation no more than thirty-five days before the anniversary date. Between sixty and ninety days before that deadline, servicers must notify borrowers of the upcoming deadline […]

Armed Forces Deferment

The College Cost Reduction and Access Act of 2007 included a deferment for members of the National Guard or other reserve components of the Armed Forces or members of such forces in retired status. This deferment is available for FFEL, Direct loan, and Perkins loan borrowers. The deferment is available to borrowers who were serving […]

Balance Based Repayment

Balanced Based Repayment plans work similarly to other loan types, and are not driven by your post-graduation income. There are currently four potential federal balance based repayment plans: Year Standard and Extended (these two work by calculating your payment based on the total loan term and your combined interest rate) and Graduated (10 year) and […]

Bankruptcy Discharge

A discharge in United States bankruptcy law, when referring to a debtor’s discharge, is a statutory injunction against the commencement or continuation of an action (or the employment of process, or an act) to collect, recover or offset a debt as a personal liability of the debtor. The discharge is one of the primary benefits […]


The individual who signed and agreed to the terms in the promissory note and is responsible for repaying a loan. This refers to the person that owes for the loan: who it belongs to. Generally the student is the borrower, however in some cases, a parent may cosign on the loan (Parent Plus Loan) or […]

Brunner Test

The three-part Brunner test begins by reviewing the debtor’s current financial condition. While the second Brunner prong focuses on expectations for the future and the third prong examines past conduct, this initial test examines the debtor’s circumstances at the time of trial. The debtor must be unable to maintain a “minimal” standard of living for […]

Burden of Proof

Generally, describes the standard that a party seeking to prove a fact in court must satisfy to have that fact legally established. There are different standards in different circumstances. For example, in criminal cases, the burden of proving the defendant’s guilt is on the prosecution, and they must establish that fact beyond a reasonable doubt. […]

Cancellation of Loan

Statutory discharges (or cancellations) provide the most powerful remedies for federal student loan borrowers. They offer complete relief as opposed to simply delaying the repayment obligation. After a cancellation, the borrower no longer owes anything on the loan and becomes eligible for new student loans and grants. In some cases, borrowers are also entitled to […]

Closed School Discharge

The HEA requires the Secretary of the Department of Education (“the Secretary”) to discharge a specified loan if the borrower was unable to complete the program due to the school’s closure. Parent PLUS loan borrowers are eligible for a closed-school discharge if the student on whose behalf the loan was taken out qualifies. The closed-school […]