Closed School Federal Loan Discharge

Information for students who attended an institution that has closed

If your college or career school closed while you were enrolled, or shortly after you withdrew, read below to learn more about your options and eligibility for loan discharge and about what happens if your loan discharge is denied.

Learn more about the factors that may make you ineligible for a closed school discharge here.

Option #1: Apply for a Closed School Federal Loan Discharge

You may explore this option if you received any of the following:

Having your federal loans discharged means that you will have no further obligation to repay some or all of the loan and may receive reimbursement of any payments that were made by you or paid through a forced collection. There is no deadline to apply for a closed school federal loan discharge after your school has closed.

You may be eligible for a closed school federal loan discharge if any of the following apply to you:

  • You are a student whose college or career school closed while you were enrolled, while you were on an approved leave of absence, or within 120 days after you withdrew;
  • You were a student attending ITT Technical Institute when it announced its closure on Sept. 6, 2016, or withdrew from an ITT Technical Institute location on or after May 6, 2016; or
  • You were a student attending any Corinthian Colleges school (Everest, WyoTech, or Heald) when it closed on April 27, 2015, or you withdrew from one of these schools after June 20, 2014.

If any of the above applies to you, you can apply for a closed school federal loan discharge by completing and returning the Loan Discharge Application: School Closure form to your loan servicer.

If you are unsure of the date your school closed, please refer to the current list of closed schools and resources found on the Office of Federal Student Aid’s webpage. Please note that this list is constantly updated and is likely to change as there is the potential for additional school closures.

Additional Information:

  • If you do not know who your loan servicer is and would like to find out, you may log in to My Federal Student Aid (login is in the upper right-hand corner) or call 1-800-4-FED-AID. You should direct all questions about the application process to your loan servicer.
  • If approved, your closed school federal loan discharge payments would only cover the federal loan balances of your Federal Direct Subsidized or Unsubsidized Loans, Federal Direct Parent or Graduate PLUS Loans, Direct Consolidation Loans, Federal Family Education Loans (FFEL), or Federal Perkins Loans.
  • State Tuition Recovery Funds may reimburse charges not covered by closed school federal loan discharges. State Tuition Recovery Fund payments could cover expenses such as private loans and cash payments that were directed toward payments at the closed school. The availability of such a fund and the requirements of each state are different. For more information on availability and eligibility, contact your state post-secondary education agency by visiting the Office of Federal Student Aid’s webpage. Once you arrive at this page, you may find contact information for each state by clicking first on your state’s fact sheet under “Closed School,” then on “Information for State Where Your Campus is Located.”  
  • Current processing times for closed school federal loan discharge applications are 6-8 weeks.

Option #2: Transfer earned credits to another institution to continue your education in a comparable or similar program.

Instead of applying for a closed school federal loan discharge, you may wish to keep the credits you have earned and transfer those credits to another school with a comparable program. If you do transfer into a comparable program offered by another school, that school will evaluate your coursework and decide whether to give you credit for the work you have already completed, as well as determine what courses you will need to take to complete the program of study at their institution. Some closed schools may facilitate this transfer process through an arrangement with other open schools via a written agreement called a “teach-out” plan. A teach-out plan is a written agreement that a school puts into place to make sure its students are treated fairly when finishing their program of study. If your institution has entered into a teach-out agreement with another institution, you will find information on the institution’s fact sheet.

It is important to know that if you transfer the credits you have earned toward a comparable program at another school and complete, or are in the process of completing that program, you will not be eligible to receive a closed school federal loan discharge.

However, if you enroll in a completely different program of study at a new school, you may qualify for a closed school loan discharge because the program of study at the new school is completely different from the program of study at your closed school for which the loans were intended. Please note that there is no separate application or process if you enroll at a new school in a completely different program from your program of study at your school that has closed.

What happens if your loan discharge is denied?

If your loan discharge is denied, you remain responsible for repaying the loan. For most discharges, the decision on whether to discharge the loan is final and cannot be appealed. The two exceptions are False Certification and Forged Signature discharges. If you receive these types of discharges, you may ask the U.S. Department of Education to review the denial. In this case, you may be eligible for a discharge of your Direct Loan or FFEL Program loan if any of these circumstances are true:

  • Your school falsely certified your eligibility to receive the loan based on your ability to benefit from its training, and you did not meet the ability to benefit student eligibility requirements.
  • The school signed your name on the loan application or promissory note without your authorization, or the school endorsed your loan check or signed your authorization for an electronic funds transfer without your knowledge, unless the proceeds of the loan were delivered to you or applied to charges owed by you to the school.
  • Your loan was falsely certified because you were a victim of identity theft.
  • Your school certified your eligibility, but because of a physical or mental condition, age, criminal record, or other reason you are disqualified from employment in the occupation in which you were being trained.

If your school has closed and your closed school federal loan discharge application has been denied, you should research the following options:

  • Contact the state licensing agency (found on the state’s individual fact sheet) and ask if there is a tuition recovery fund or performance bond that will cover your damages based on the school closure.
  • If the school filed for bankruptcy, you should file a claim for your loss in the bankruptcy proceeding. You may also consult an attorney about any options you may have through the court system.