Will canceling my debt negatively impact my credit score?


The Department of Veterans Affairs sent me a letter saying they were going to cancel my student loans, (about $7,000) but that I could stop them from forgiving my student loans if I want to.

I have a few questions;

1. Will canceling my debt negatively impact my credit score?
2. Will I be able to get future student loans if I want to go to graduate school?

(The process states that I WILL be able to get those loans if I waive some stuff and agree to have my old loans reinstated). But my question is more basic:

will anyone give me a loan?



1. The most common credit score is of the form used by FICO (Fair Isaac Corporation).  The calculation has five components, payment history, amount owed, length of credit history, new credit, and type of credit used.  The first two of these are positively affected by the debt forgiveness, and the others are not affected.

2. The rules state that if you apply for future student loans, your disability status will need to be reevaluated and you will have to be certified that you are now able to resume gainful employment.  reevaluated.  If it is not 3 years since you received the debt discharge, you will also have to resume paying for your past loans.

As far as I can tell, after three years, there are no restrictions on receiving loans after the three year period is completed.

These answers assume you currently qualify for total and permanent disability.  However, we do not have all the information on your case.  For questions regarding debt repayment liability if you resume study, it would be useful to consult your school’s financial aid office to make sure that your specific circumstances are accounted for. 

Answered by
  • University Professor Emeritus
Last updated on
October 17, 2023

Explore Our Programs

Interested in more answers or studying in the Department of Economics?