Learn more about Closed School Discharges for Federal Student Loan Borrowers
Closed School Tips and FAQs
Q: Is it ever possible to extend the requirement that I must have withdrawn from the school 120 days before closure?
A: Yes. The government may extend this period if exceptional circumstances apply. For example, the Department of Education has extended eligibility to Corinthian borrowers who withdrew on or after June 20, 2014 from a Corinthian school that closed on April 27, 2015.
Q: Can the government deny the closed school discharge if my school closed but I completed the program at another school? A: Under current regulations, yes, but only if you complete the same program because you transferred one or more credits earned at the closed school to another school or if the two schools had a written “teach-out” agreement allowing students to complete their courses at another school after the original school closed.
Note that if you do not qualify for a closed school discharge due to the transfer of less than all of the credits you earned at the closed school, you may seek a partial loan cancellation by asserting a defense to repayment.
Q: What if I transfer credits to a different school for a different program of study? A: As stated above, you are only ineligible for closed school discharge if you complete your program through a teach-out at another school or if you complete the program at another school through the transfer of one or more credits from the closed school. The closed school discharge form states that this provision only applies if the program you complete at another school is the same or comparable to your program of study at the closed school. Although there is no standard definition of a “comparable program”, the Department recently posted factors it considers when making this determination. (see question 15 in this list of FAQs). The factors may include: 1) the academic or professional nature of the two programs; 2) the similarity in course requirements; 3) the treatment of transfer credits by the institution accepting the creditors and 4) the disposition of a state approving agency or accrediting agency on the comparability of the programs.
You should be eligible for the discharge if you enroll in the same program at another school, but do not transfer any credits from the closed school.
Q: Is there anything I can do to stop collection while I am waiting for a response to a closed school discharge application?
A: Yes. One strategy is to request forbearance. Interest will continue to accrue, but collection will stop. If you want to go back to school before a decision on the discharge is made, you should consider reviewing repayment, loan rehabilitation, and consolidation options. Be careful as some options, such as consolidation, may affect your ability to get a discharge.
Q: Can I borrow to return to school if the decision on my closed school discharge is pending?
A: If you are in default, but want to go back to school before a decision on the discharge is made, you should consider reviewing repayment, loan rehabilitation, and consolidation options. You will not be able to return to school and qualify for federal loans as long as your loans are in default. However, if you are not in default, this should not be a problem if you have not exceeded your lifetime student loan limits.
Q: What if I was on a leave of absence when the school closed?
A: A student on an approved leave of absence is treated as if she is still enrolled. If your return date was scheduled before the school closed and you did not return to school after a leave of absence, the withdrawal date will be the date that you began the leave of absence. For purposes of a closed school discharge, a student on an approved leave of absence who tried but could not return to the school because it was closed should still be eligible for the discharge.
Q: What kind of proof can I submit if I think that the official school closure date is wrong?
A: Possible sources of information include dated newspaper articles or other media reports about the school’s closure. You might also try to collect signed statements from other students, state regulators, or former school employees about the closure date.