Under certain circumstances, you may be able to cancel your obligation to repay your federally guaranteed student loans, defer your payments, or enter into a payment schedule that fits with your income. If you're in default, you may be able to get out of default and avoid a lawsuit, wage garnishment, or loss of your tax refund.

The student loan scheme is quite complex, depending on the type of loan you have and when you obtained it. Before taking action on your loan, you must understand what kind of loan it is. Your ability to negotiate with your lender, defer your payments, or possibly cancel your loan may depend on the type of loan you have.

There are three primary kinds of federally guaranteed student loans: campus-based loans, bank loans, and Department of Education-issued loans. Campus-based loans are called Perkins Loans or the older National Direct/Defense Student Loans (NDSLs). Bank loans are called Federal Family Education Loan Program (FFELP) loans and include Stafford Loans (previously called Guaranteed Student Loans (GSLs) or Federal Insured Student Loans (FISLs), PLUS Loans (loans for parents), SLS Loans, and consolidation loans. Loans issued directly by the Department of Education are called Direct Loans and include Stafford, PLUS, and consolidation loans.

Depending on the type of loan you have and when you obtained it, you may be able to cancel all or a portion of your loan under one of the following circumstances:

1. The former student for whom the loan was taken has died.

2. You become totally and permanently disabled.

3. Your school closed before you could complete your program of study.

4. Your school falsely certified that you were eligible for a student loan.

5. You left school and were entitled to a refund but never received the money.

6. You teach in a Department of Education-approved school serving low-income students or in designated teacher shortage areas (other types of teacher cancellations are available for Perkins loans).

7. You serve in the U.S. military (partial cancellation for Perkins loans only).

8. You're a full-time employee of a public or nonprofit agency providing services to low-income, high-risk children and their families (Perkins loans only).

9. You're a full-time nurse or medical technician (Perkins loans only).

10. You're a full-time law enforcement or corrections officer (Perkins loans only).

11. You're a full-time staff member in a Head Start program (Perkins loans only).

12. Your a Peace Corps or VISTA volunteer (Perkins loans only).