There are certain criteria that make you eligible for a closed school discharge, and there are certain steps you need to take to get a discharge.
Note that you might need your academic records if you plan to attend another school and want to have your coursework at the closed school taken into consideration. So it will be important for you to obtain your academic and financial aid records if your school closes. Contact the state licensing agency in the state in which the school was located to ask whether the state made arrangements to keep the records. The records might also be useful in substantiating your claim for a loan discharge.
Discharge Criteria
Discharge Process
Q&A on Closed School Loan Discharges
What benefits do I have by receiving a closed school loan discharge?
I have nonfederal loans through private lenders. How can I get those loans discharged?
I have loans for several different programs of study at the same school, but was unable to complete any of the programs or transfer credits from one program to another prior to the school’s closure. Can all the loans be discharged?
I did not complete the program, but I received a diploma or certificate. Do I qualify for a loan discharge?
I transferred credits from a closed school and enrolled in a completely different program of study at a new school and completed the new program. Are the previous loans from the closed school dischargeable?
I attended a school that is now closed. Where can I obtain a copy of my academic transcript?
My school informed me that they have arranged a “teach-out” plan with neighboring schools. What is a teach-out plan?
If my school closes and I then enroll (either through a teach-out plan or by transferring academic credits or hours earned from the closed school) in a comparable program at another school for the purpose of completing the program for which a loan was made at the closed school, can I still receive a discharge?
Discharge Criteria
You may be eligible for a 100% discharge of your Direct Loans, Federal Family Education Loan (FFEL) Program loans, or Federal Perkins Loans under either of these circumstances:
- Your school closes while you're enrolled, and you do not complete your program because of the closure. If you were on an approved leave of absence, you are considered to have been enrolled at the school.
- Your school closes within 120 days after you withdraw.
You are not eligible for discharge of your loans if your school closes and any of the following is true:
- You withdraw more than 120 days before the school closes.
- You are completing a comparable educational program at another school
- through a teach-out agreement with the school,
- by transferring academic credits or hours earned at the closed school to another school,
- or by any other comparable means.
- You have completed all the coursework for the program, even if you have not received a diploma or certificate.
Discharge Process
Contact your loan servicer about the application process for getting your loan discharged.
- Be sure to continue to make payments on your loan while your discharge application is being processed.
- Find out what happens if your loan discharge is approved.
- Find out what happens if your loan discharge is denied.
Q&A on Closed School Loan Discharges
What benefits do I have by receiving a closed school loan discharge?
By receiving a closed school loan discharge
- you have no further obligation to repay the loan,
- you will receive reimbursement of payments made voluntarily or through forced collection, and
- the discharge will be reported to credit bureaus so as to delete any adverse credit history associated with the loan.
I have nonfederal loans through private lenders. How can I get those loans discharged?
You will need to contact the private lender that originated (made) the loan to get that information.
I have loans for several different programs of study at the same school, but was unable to complete any of the programs or transfer credits from one program to another prior to the school’s closure. Can all the loans be discharged?
As long as you did not complete any of the programs of study and you meet all other applicable eligibility criteria for a closed school loan discharge, all of your loans may be discharged.
I did not complete the program, but I received a diploma or certificate. Do I qualify for a loan discharge?
Before closing, some schools may have issued a diploma or certificate to students who did not complete the program of study. The issuance of a diploma to a student who did not complete the training program will not disqualify the borrower for discharge if the other requirements for discharge are met.
I transferred credits from a closed school and enrolled in a completely different program of study at a new school and completed the new program. Are the previous loans from the closed school dischargeable?
Yes, because the program of study at the new school is completely different than that of the closed school, for which the loans were intended.
I attended a school that is now closed. Where can I obtain a copy of my academic transcript?
If you are trying to locate your academic records from a closed school, you should contact the state licensing agency in the state in which the school was located to ask whether the state made arrangements to store the records.
My school informed me that they have arranged a “teach-out” plan with neighboring schools. What is a teach-out plan?
A teach-out plan is a written course of action a school will take to ensure its students are treated fairly with regard to finishing their programs of study. Some plans include written agreements between the closed school and other schools that are still open for teaching.
If my school closes and I then enroll (either through a teach-out plan or by transferring academic credits or hours earned from the closed school) in a comparable program at another school for the purpose of completing the program for which a loan was made at the closed school, can I still receive a discharge?
No, not if you completed or are in the process of completing a comparable program of study.
