How to Use the Closed School Student Loan Discharge Program to Eliminate Your Student Debt
UPDATED Tuesday March 25th, 2020
One of the fastest ways to get rid of federal student loan debt is to use the Department of Education’s Closed School Loan Discharge Program, which is one of the best Federal Student Loan Forgiveness Programs currently on offer.
Called a “Closed School Discharge”, this program allows you to wipe out student loan debt from a school that shut down before you were able to finish their program. This is a particularly powerful option for anyone who attended one of the huge for-profit schools that closed their doors in recent years as the higher education industry collapsed.
Which Schools Have Shut Down?
For full details on getting a Closed School Discharge from each of the major schools that have shut down over the past several years, please visit my Guides on:
- Corinthian Colleges
- Everest College
- Heald College
- ITT Tech
- Westwood College
- Le Cordon Bleu
- Kaplan University
- Anthem College
- Brown Mackie College
- Brightwood College
- Argosy University
- The Art Institutes
- College of New Rochelle
- Concordia University
- Green Mountain College
- Marygrove College
One thing to point out about Closed School Discharges is that they are only available to people with Federal student loans.
What that means is that you need to have a Federal loan under the Federal Direct Loans Program, Federal Family Education Loans Program (FEEL Loans) or Federal Perkins Loans Program to be eligible for the Closed School Discharge Program.
Who Qualifies for a Closed School Discharge?
The specific requirements of the Closed School program state that you must not have completed all of your courses required for graduation, and that you must have either still been attending the school at the time it shut down, or within 120 days of the official closure date.
If you satisfy those requirements, the Discharge approval is basically an automatic process, and one that’s relatively easy to get, so I would highly recommend that you pay close attention to this post and follow the application instructions closely, because doing so gives you a really good chance for having your student loan debt entirely forgiven.
Keep in mind, however, that even if you do not qualify for the Closed School Discharge, you may still be able to challenge the validity of your debt via the Borrower’s Defense Against Repayment Program, which is especially powerful against the types of schools that have been closing down in recent years (most of these schools that shut were for-profit schools, online schools, or schools with dubious reputations, etc.).
Get Help With Your Loans!If you're truly struggling with student loan debt, then you should consider paying a Student Loan Debt Relief Agency for help. Why? Because the people working at these companies deal with student loans all day, every day, and they're your best chance at figuring out how to get your loans back under control.
For help with Federal Student Loans call the Student Loan Relief Helpline at 1-888-906-3065. They will review your case, evaluate your options for switching repayment plans, consolidating your loans, or pursuing forgiveness benefits, then set you up to get rid of the debt as quickly as possible.
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I've spent 10 years interviewing debt relief agencies, talking to all sorts of "experts", and these are the only two companies that I trust to help my readers. If you have a bad experience with either of them, please make sure to come back and let me know about it in the Comments!
Full Eligibility Rules for the Closed School Loan Discharge Program
You can qualify for a Closed School Discharge if your school closed under one of the following circumstances:
- The school you were attending closed while you were still enrolled, and you weren’t able to complete your education program because of the closure
- The school you were attending closed within 120 days after you withdrew from their program
This program has been popularized by several closures of some absolutely enormous For-Profit Schools, including several that were literally the biggest on planet earth at the time that they shut!
First, things got interesting when the Corinthian Colleges system (Heald, Everest and Wyotech) collapsed in 2015, then the heat really ramped up when mega-schools ITT Tech and Westwood College closed in 2016.
And what’s especially awesome about the Closed School Discharge program is that you can still qualify for the discharge even if you were on an approved leave of absence from the school when they shut down.
Basically, the Federal Government would still consider you to have been “enrolled” even though you were out on LOA.
Conditions that Ruin Your Eligibility for a Discharge
If you fall under any of the following categories, then you will not be eligible for a Closed School Discharge:
- The school closed more than 120 days after you withdrew from courses
- You’re now attending a similar educational program at another school, after having transferred academic credits from the school that shut down, through a “teach-out” agreement, or by any other comparable means
- You completed all the required coursework in the program, even if you didn’t yet get your official diploma or certificate for completion
Basically – the program was created for people who ended up screwed when their school shut down, with no way of continuing the program they’d racked up student loan debt to pay for.
The Closed School Discharge Process
How do Closed School Loan Discharges actually work? It’s relatively simple.
- Contact whoever services your loans. This is the company or organization that you send your monthly student loan payments to. Since each servicer has a different applications process, you’ll need to get in touch with whoever services your debt to figure out what they need to process your application.
- Once you’ve received the application paperwork from your loan servicer, fill it out completely, then submit it via whatever means they allow (some loan servicers allow Internet-based applications, while others will need them faxed, or sent via snail mail).
One important thing to keep in mind is that you’ll need to continue making payments until your loan servicer tells you (in writing) that you don’t have to issue them anymore.
As you will not be approved for a discharge until you’ve received the official paperwork, any payments you miss after applying (but before receiving approval) could lead to financial problems.
If you’re having trouble getting the paperwork from your loan servicer, then you can grab the 2016 Closed School Discharge Application Form here instead.
Note that the link above is to the official Federal Government application form, which you can fill out and then submit to whoever services your loans.
Who Is My Loan Servicer?
If you don’t know who services your loans, there are a few simple ways to sort that out.
- The easiest way to figure it out is to look at your monthly student loan bills to see who your payments are being sent to. You can then try Googling their name and address, and should be able to quickly identify the company and find their contact information.
- Another way to get the details is to use the Federal Government’s official website, called the “My Federal Student Aid” site, and located here. Visiting this site and logging in will allow you to pull the relevant details you need to complete your Closed School Discharge application.
- If you can’t sort out the website login, then you can call the Federal Government’s official student aid phone number at 1-800-4-FED-AID (1-800-433-3243) and ask them who services your loan.
If you STILL can’t figure out who services your loans after trying all of the above, then you probably won’t be able to sort out your Closed School Discharge paperwork, and I would absolutely recommend enlisting the help of one of the paid services available.
These companies will handle the entire process for you, typically for a few hundred dollars, and my favorite company that offers this service is called the Student Loan Relief Helpline, who you can reach by calling 1 (888) 906-3065.
State Tuition Recovery Fund Refunds
If you’ve been affected by a school closure, then you may also be eligible to get a refund from your state (which comes in addition to the Federal Government money you’ll be getting), through the State Tuition Recovery Fund program.
To find out if you’re eligible for this benefit, you need to contact your state’s Postsecondary Education Agency.” This is the group that runs higher education in your state, and who is responsible for determining laws, monitoring compliance, enforcing regulations, etc.
To figure out who you need to talk to, simply head to Google and search the phrase “YOURSTATE Postsecondary Education Agency”. Obviously, replace “YOURSTATE” in the previous sentence with whatever state you live in.
As an example, if you’re from Texas, you’d search the phrase “Texas Postsecondary Education Agency”, and you’d get results with their website, phone numbers, email addresses, etc.
Contacting this agency will allow you to see if you’re eligible for any State funds, and it’s worth checking, because a five minute phone call could save you thousands of dollars.
Other Options – Transferring Credits
If you don’t want to get your debt discharged because you’re interested in finishing your higher education program without having to start all over, then you should know that your other option is retaining the credits you earned at the school who closed via process known as credit transfer.
It’s possible to apply for transferring credits earned from the school which closed to a new school, who offers a comparable program, and then to finish up your degree or whatever program you were enrolled in at the new destination.
Please note that this will invalidate your opportunity to receive the Closed School Discharge, but it will allow you to continue with your education program without the setback of lost time and effort.
Applying for the Discharge means that you get all your money back, but essentially all the time you spent in school ends up being wasted. For some students, it makes more sense to transfer credits and finish the program than it does to get the money back (especially if you’re really close to finishing).
Frequently Asked Questions
Many people are being affected by schools closing down, and it’s likely that this population will only increase moving forward, since there are several very large for-profit school systems that are having trouble staying open for business.
Below you’ll find some of the most common questions regarding the Closed School Discharge program. If you don’t see your question listed below, please feel free to post in the comments section at the bottom of this page and I will do my best to answer your question as quickly as possible.
My School Shut Down. What Should I Do?
You either need to apply for for the Closed School Loan Discharge, which is outlined above on this page in detail, or you need to apply to transfer your credits to another school, where you can finish your education program.
The choice is up to you, and depends entirely on your unique educational and financial situation. People with a ton of debt will probably want to choose the discharge, while people really close to completing their educational program will probably want to apply for transfer credits.
How Can I Find Out How Much I Owe?
Check the section of this page above called “Who Is My Loan Servicer”, which details the process of figuring out who services your loans.
Once you know who services your loans, you can contact them to ask how much money you still owe, and then determine which option (the Closed School Discharge or the Transfer Credit process) will work best for you.
What Is A Loan Discharge?
It’s the same thing as “Loan Forgiveness” – a complete wiping out of all the debt that you still owe, but in the case of the Closed School Loan Discharge program, it’s even better… because this program doesn’t just forgive your remaining debt… it also REFUNDS everything you’ve already paid.
And that’s what makes Closed School Loan Discharges the single best way to Erase Student Loan Debt Without Paying For It.
If you qualify for this program, you should absolutely take advantage of it!
How Does a Discharge Affect My Credit?
Because you’re going to get a refund for any and all payments you made previously on your eligible student loan debt, either voluntarily or through forced collection processes (like wage garnishments, etc.), your credit is likely to be impacted.
If you had credit problems resulting from your student loan debt, then those are likely to clear up, because your discharge will be reported to the credit bureaus and any negative activity on your report will be cleared.
Is There An Application Deadline?
Fortunately, there’s no deadline for applying to the Closed School Discharge program.
No matter when your school shut down, no matter how long it’s been, you can still apply for the discharge, as long as you haven’t already transferred your credits elsewhere.
And that’s another great thing about this program, because many people won’t even find out about it until long after their schools have shut their doors.
Need Help With Federal Student Loans?
Even if you can’t use the Closed School Loan Discharge Program, that doesn’t mean you need to give up because there are sorts of other assistance programs available to people with Federal debt.
And you can find out all about them right here at ForgetStudentLoanDebt.com, because I’ve spent the past decade writing over a hundred articles on these programs!
If you need Help with Federal Student Loans, be sure check out my Guides on:
- Federal Student Loan Forgiveness
- Federal Student Loan Bankruptcy
- Federal Student Loan Consolidation
- Federal Student Loan Delinquency & Default
- The Federal Student Loan Rehabilitation Program
- Federal Student Loan Wage Garnishment
- Federal Student Loan Deferment
- Federal Student Loan Forbearance
- Federal Student Loan Repayment Plans
Need Help With Private Student Loans?
And if you’ve got private student loans, the bad news is that there is far less assistance available than you’d have access to with Federal debt, but there still are SOME programs that MAY be able to help.
To find out about the programs you might be able to use, take a look at my articles on getting Help with Private Student Loans, including:
- Private Student Loan Forgiveness Programs
- Private Student Loan Consolidation
- Private Student Loan Bankruptcy
- Private Student Loan Defaults
If you have any other questions about student loans, please post them in the Comments section below and I’ll do my best to get you a response within 24 hours!
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Disclaimer:Information obtained from Forget Student Loan Debt is for educational purposes only. You should consult a licensed financial professional before making any financial decisions. This site receives some compensation through affiliate relationships. This site is not endorsed or affiliated with the U.S. Department of Education.
I attended the Art Institute of New York City’s Culinary program. I withdrew from the school late in 2008 due to the fact that I couldn’t get anymore loans and I couldn’t afford to pay the school directly. I only had one class left for my degree. AINYC officially shut down fully about two years ago, but the culinary program had already begun to close before I withdrew from the school (they stopped accepting new students that very semester. we were told that the school would stay open until everyone already enrolled completed their program). I am having difficulty finding out the exact close date of the culinary program to see if I qualify under the 120 days. I am not interested in attempting to transfer any credits, as I had already looked into that 10 years ago when I originally withdrew, and I couldn’t even transfer my AINYC credits to AI Philadelphia! Its a shame that the (financial and recruitment) operation of AI is such a scam, because I truly did feel like I got a great education 🙁
You might have a shot at a BDAR Discharge!
DO NOT pay any third party company who promises to wipe away student loans or assist with paperwork. It is a scam! NEVER give your money to these companies. They have several different business names but it’s a scam. They had a class action lawsuit come against them and they had to settle and pay people back. The department of education warns about paying any company for student loan help. The service is free on the department of educations website.
Some people can’t figure out how to deal with their loans, that’s why third party companies exist. The people who can figure out how to deal with their debt don’t end up on my website, or they read my advice and then take care of things themselves. But I’ve been watching this space and advising people how to deal with their debt for TEN YEARS now and the first thing I’d tell you is that you are dead wrong. Many, MANY people buried in excessive student loan debt got there because they didn’t even realize what they were signing, and those people aren’t going to solve this problem on their own.
Looking for any information about loan forgiveness or discharge from loans that I acquired from KAPLAN UNIVERSITY ONLINE PROGRAMS.
Yeah, take a look at my Guide to Kaplan Loan Forgiveness.
My cosmetology school closed and offered us to move to one of their other campuses with the rest of our remaining hours being scholarshiped out… only to have all locations close a few months later. If I apply for school closure forgiveness do I lose my hours? Undecided on whether to finish, but do not want to give up that option if I decide to go back….
And I should note, no warning of closure. Came in to school one day to be told “effective immediately.”
So, if your approval comes through, then you lose your hours.
I am also an Argosy student I had just finished fourth quarter. I had at least two to three more years to go. So my loans were quite new had not completely been taken out I don’t know. all I know is they say I owe a little over $10,000. I have not heard anything from the school.
hi, i’m at a total loss here… a good bit of months ago, my online school, the Art Institude of Pittsburgh Online devision closed down. not only was this shocking because i was never warned about this (just found out after logging in one day to do school work, and boom. classes were gone and there was an email stating “oops we’re closed!”), but it closed right after my last and FINAL class had just started. i was 7 total weeks from getting my degree. but no worries, right? i can just transfer credits to another online school with a similar degree! so i tried that. tried to transfer to AAU until they informed me i have no federal loans left. i RAN OUT of finantial aid. AI never warned me about this. obviously my last class had to have taken those last few thousands, but they never bothered to let me know. i can’t afford to take out a loan from a bank, i definitelly can’t pay 10,000 dollars out of pocket to finish my degree, so what do i do? i asked about loan forgiveness, figuring whatever, it’s better just to start over than never get my degree, right? well, that wasn’t possible because even their assosiets degree would have made me run out of aid by the end anyway. so i figure discharge is my only other option. i file for discharge, it’s accepted, and i think “awesome, now i can finish my degree!” so i try AGAIN to enroll in AAU. everything’s great until they inform me that my discharge might be reversed if i enroll into a similar degree. then i’d me back where i started, not able to afford my classes. i’m at a loss here. i’m at my witts end. the Art Institute has screwd me over ten fold. i need help desprately, what do you suggest i do now?
If you were still enrolled at the school when they shut, then you can apply for a Closed School Loan Discharge, but if that gets approved your debt will be forgiven and you’ll lose all your credits. Or you could try for a Borrower’s Defense to Repayment Discharge, which will also cancel your loans if it’s approved, but again, take away your credits. Those are your options.
I was a student for two different degrees at Kaplan university in the state of Maine and returned for my BSN at Kaplan before they were bough out by Purdue global university. I’m in the last two terms of my BSN (now under Purdue global) can I apply for forgiveness as well? I was lied to about the possible earnings after getting my degree, they talked me into being a student tutor but never told me that I wasn’t getting paid through the college, it was actually coming off my financial money. therefore when I applied for financial aid for my BSN they told me I had no more financial aid left because of the pay I received over two years as a tutor. Darla
You can apply for forgiveness, but if you get the forgiveness it’ll mean sacrificing your credits.
Hi Tim! Another Argosy student here…. I was on an official LOA, but it was several years ago. I never withdrew from school/classes, but I never officially returned either. There wasn’t an end date to my LOA. Can I still qualify for the School Closure Loan Forgiveness? They sent me the paperwork for it, but I don’t know if I qualify or not. Thank you.
Ooooh, this is tricky. I would definitely try to apply for it just in case, because it still may work. If you were technically still on LOA from the school when they shut, then you should qualify. You might have gotten very, very lucky!
My school (Argosy University) recently closed, and a teach-out to another crappy online program was provided. Most of us were pushed into signing on, but then some of us changed out minds later. One of my classmates recently received a letter that his school loan would not be discharged because he was offered the teach-out, even though he did not take that option. Is that really allowed? The Federal Loan site is pretty vague, but it does say that a person doesn’t qualify if they are participating in a teach out, which we opted not to do. I guess the question is, can we fight that decision?
I read in another website that if a loan is discharged but then the individual ends up completing that program of study at another institution, they may have the discharged loans reinstated and be responsible for paying them. My question is: How do they know? How can the Federal Student Loan people see if a student has transferred credits or has been offered a teach out or eventually finished their program of study? There is so little information on how/if these institutions are communicating. I would like to be more clear on the subject in order to make informed decisions regarding both my education and my finances.
Good question, and honestly, I’m not entirely sure, since it sounds like you accepted the teach out, but then changed your mind?
Try calling the Department of Education’s official BDAR Hotline to see what they think: 1-855-279-6207.
What you read elsewhere is true – you can’t discharge a loan if you are going to transfer the credits and apply them at another school, so you basically have to pick either getting rid of the loan and sacrificing the credit, or transferring the credit and keeping the debt.
Everything is reported to the Department of Education, that’s how they know.
Kate, I am also an ex Argosy student. And you are right… I’m being flooded with offers to “come here and finish your degree”. I am not going to. I have already applied for student loan discharge and currently my loans are in forebearance. They explained to me that this is what they do so I do not have to make payments while they do what they need to do to make the loans go away. I highly recommend calling your student loan servicer directly and discussing it with them. I had 10 classes to go and I’m kind of bummed… but I also believe that things happen for a reason. This is actually the SECOND Argosy closure I’ve endured. The first time they closed my Dallas campus, but offered to keep me in the online only part so I stuck it out… this second closure… well… I’m out! Best of luck to you!!
I graduated from Illinois Institute of Art (Art Institute) in Chicago Illinois in December of 2004. They denied me of financial aid and convinced me to take out Studnet loans. Also, they picked my classes for me and told me that they guarantee that I would be able to get a job once I graduated from the school. That never happened. In fact a lot of companies don’t take my degree. Also, the school I graduated from school closed down. Do I qualify for Loan discharge Or School closing or Borrower’s Defense Against Repayment Program?
I’d try pursuing the Borrower’s Defense Discharge.