Has your school shut its doors? Or have you received the dreaded news that your for-profit college is shutting down? If you took out student loans to attend a school that’s now closed or in the process of being closed, you may have a lot of questions about closed school discharge.
There are colleges out there that have closed their doors for good. Westwood college loan forgiveness is an option because it is one of the schools that has permanently closed. It can be a jarring experience to have your school close and you’re left wondering what will happen. One big question you may have is: “Do I have to pay my student loans if my school closed?”. I know this answer is frustrating, but it depends.
Read on to learn more about what to do with your student loans if your school closed.
Closed school discharge
Let’s start with some good news. It is possible to get your federal student loans 100 percent discharged, under certain circumstances. So if you’re wondering if you have to pay your student loans if your school closed, the answer is (hopefully) no, if you meet the eligibility requirements.
If you have Direct Loans, FFEL Loans or Perkins Loans, you may be eligible for student loan discharge if you meet the following criteria:
- You were a student and enrolled in college at the time the school closed
- You were on a leave of absence that was approved by your school at the time the school closed
- You withdrew from school and your school closed within 120 days of that period
If you meet one of these criteria, you may be eligible for 100 percent student loan discharge.
On the other hand, you are disqualified from getting your student loans discharged if the school you attended closed and:
- You withdrew from school within a period that exceeds 120 days, except in rare cases
- You are enrolled and part of another educational program
- All of your coursework for your program is done — this is still true even if you have not yet obtained your diploma or certificate
It’s important to note that this information is regarding federal student loans only. If you have private student loans and your school has closed, you will need to contact the lender to see about their policy and procedures.
Applying for student loan discharge
If your school closed and you have federal student loans, they will not be automatically dismissed. You will have to apply to get your loans discharged.
First, fill out the Closed School Loan Discharge Application and send it to your loan servicer. Secondly, ask your loan servicer about the application process for getting your student loans discharged. There is not a set deadline for the application but you’d want to submit it as soon as you can.
If you are currently making payments, be sure to continue doing so until you are approved or denied for the discharge.
Once approved for student loan discharge, you’ll be off the hook for any repayment going forward.
If your application for student loan discharge is denied, you legally still have to make payments per your promissory note. If you are denied and think there has been a mistake, get in touch with your loan servicer and explain your reasoning.
Regarding what to do next with your schooling, you can take a look at the Department of Education’s Closed Schools list to see if your school is on there and learn about next steps.
Paying back your student loans
In what cases might you not qualify for a student loan discharge if your school closed? You may not be eligible if you have private student loans. Awful, I know, but it really depends on your lender. Contact them ASAP to find out about any student loan discharge options.
You may also be offered a “teach out”, which allows you complete remaining coursework toward your original program and earn your diploma through another school. In this case, you’d still be on the hook for student loans as you’re still able to complete your education and obtain a degree.
On the other hand, if you say no to a “teach out” offer, it’s likely you will not have to pay back your federal student loans.
Stay informed about your closed school discharge options
If you have attended a school which shut its doors and are wondering what to do next, don’t fret just yet.
In many cases, your federal student loans may be eligible for student loan discharge. The key is to fill out the student loan discharge form, talk to your loan servicer about the application process, and figure out the next steps for your education.
It might make sense to transfer to another program and forgo closed school loan discharge. For example, if you have $200,000 of student loans from attending Argosy University’s psychology doctoral program, you might be confident you’ll earn $80,000 with a PsyD. Without one, you think you’ll earn $50,000.
Since $200,000 in federal student debt is a lot like $400,000 in student debt (meaning you pay the same percentage of income), you want to think about your loans as a tax, not as a debt.
In that case, a payment of 10% of your income at $80,000 could be the better financial deal over paying nothing but only earning $50,000.
You must analyze closed school student loan discharge on a case by case basis. Feel free to reach out to us or share your experience in the comments below.
Did your college close? What are some of your tips for other borrowers going through the same thing?
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Nicole says
February 2, 2019 at 5:24 amI wanted to know if I qualify. I left the college and was supposed to be back. Everyone knew and was okay with it. I recently am coming back and I’m notified that the massage therapy program of my school Brandford Hall is closed. I still have 10,000 to pay for a license/internship/job/experience I did not receive. I’m confused as to what I could do.
Travis Hornsby says
February 2, 2019 at 3:45 pmYour first step is to apply with your loan servicer and continue making payments because you don’t have anything to lose in applying.
Andrew says
February 17, 2019 at 9:20 pmIf my school loses accreditation and I’ve completed all the classes, but not the internship required for graduation, will I be eligible for Closed School Loan Discharge if I withdraw before they close?
Travis Hornsby says
February 18, 2019 at 2:04 pmThe closed school discharge mainly has to do with if the Dept of Ed decides the school was defrauding people. I’m not so sure a loss of accreditation will do it for you.
Domniono Robertson says
March 1, 2019 at 11:10 pmI got a letter from the school I attended Sandford Brown in 06-07 I didn’t finish but I started paying back loans in 2010 I’m in default and working on a payment plan, however I got a letter in the mail advising me that due to a recent settlement with the state attorney’s general, including the Tx attorney general beginning Feb 1 2019 we are foregoing collection on any outstanding balance including interest and fees you owe to Sanford brown such balance will be reduced to 0. This action is limited to the amounts you owe to Sanford brown college and does not remove, replace or cancel any payment responsibilities that you have regarding any federal student loans or any loans owed to other institutions or 3rd parties that are outstanding. My question is does this mean that I don’t have to pay back the student loans since they are collecting on there behalf?
Travis Hornsby says
March 2, 2019 at 11:04 amCertainly sounds like it! I would highly suggest reaching out to a student loan attorney like jay@moneywiselaw.com. Ask him for a connection to a competent attorney located in Texas. I would want to verify that the debt is cancelled and an attorney licensed in your state should be able to confirm that.
Ashley says
April 2, 2019 at 4:03 pm@Domniono Robertson if you have any information that you could share with me that would be wonderful. I also attended Sanford-Brown College and have a $27K student loan with a bogus degree. Thanks in advice!
Ashley says
April 2, 2019 at 4:00 pmI attended Sanford Brown College in 2003 and graduated. Because of the misleading, deceiving, and non-accreditation I have been stuck putting my loan in forbearance all this time because I simply can not afford to pay on my student loan. My loans (now with Navient) are at $27k.
I have not received any letters that my loans will be forgiven because of settlement. Is the settlement only for private student loans or federal? I believe that my student loan is federal but I am not for sure.
Any advice on this would help or what can be done to have my loans removed?
This has been a burden on myself for so many years financially and emotionally.
Travis Hornsby says
April 2, 2019 at 6:48 pmI’d suggest applying for borrower defense to repayment and see what happens. https://borrowerdischarge.ed.gov/s/?language=en_US That’s the online application. These forgiveness rulings are being held up by the Dept of Ed right now, but you should go ahead and try to get the loans discharged
Rachel Lee Dykes says
August 28, 2019 at 2:52 pmI went to long technical college in Phoenix Arizona and I was supposed to get refresher courses for life. I now have a medical assistant diploma that has become worthless to me and I still owe 6k on it. I graduated over 10 years ago and was out of work for 4 years. So I have any recourse?
Travis Hornsby says
September 1, 2019 at 10:04 amProbably not Rachel if it was me I’d just try to eliminate it so I could move on. If it was 60k I might have a different answer. If you wanted a second opinion consider hiring a student loan lawyer.
Jennifer says
April 11, 2019 at 7:52 amDoes getting a closed school loan discharge prevent you from getting aid in the future?
Travis Hornsby says
April 11, 2019 at 8:02 amI don’t believe so but I’d definitely check on that
Verline Webb says
July 9, 2019 at 6:51 amDo you have any information about any other loans? I took out a loan at Mr J’s hair Academy In 1989 in the amount of 5,000 dollars. Now they are saying that I owe 39,000. How is that possible. When the cost of the class only cost 5,000 dollars?
Travis Hornsby says
July 16, 2019 at 3:25 pmProbably because it’s been compounding since payments didnt get made and since student loans cant be discharged in bankruptcy that’s how it happened. Sorry to hear. I’d definitely contact an attorney like jay@moneywiselaw.com to see if you can do something about it.
Jennifer says
April 11, 2019 at 3:58 pmIf I attend a school 14 years ago (never completed) and the school is currently closed down due to fraud do I qualify for loan forgiveness
Travis Hornsby says
April 11, 2019 at 5:54 pmGenerally you have to have been a student while the school closed, but here’s the discharge form if you want to try https://studentaid.ed.gov/sa/sites/default/files/closed-school-loan-discharge-form.pdf
Chris says
April 19, 2019 at 2:49 pmi attended a school that said they get you into the job once out. I completed associates and the continued to work on bachelors online where I had all kinds of problems and then was with drawn from the program cause I was told i took to long to complete even though they wouldnt help figure out my problems and still had no help on getting the job the said they would help get. not long after leaving the school closed and I was left with empty promises and loans I am fighting to pay and a job doing something I didnt go to school for
Travis Hornsby says
April 20, 2019 at 8:24 pmThat’s tough. I don’t think you’d be able to get any discharged unless you were enrolled when it closed.
Brittani says
April 30, 2019 at 1:00 pmI took a leave of absence last July which was good for 6 months. However, I never received a follow up about that in January from the school and could not get in contact with anyone as employees were being let go then the school officially closed in March and merged with another school. I’m still trying to get in touch with someone at the merged school to see if am still listed as a student as I never did sign off anything about officially withdrawing. I’m assuming my loan discharge application was denied because it’s been past 120 days since I took a leave. Now I’m in the process of filling out another application to explain why I should not be denied. What “rare” cases are you referring to that would qualify me to have my loans discharged?
Travis Hornsby says
April 30, 2019 at 1:26 pmThe rarest cases are borrower defense to repayment saying you were scammed essentially. The closed school discharge is easier to get if you were a student when it closed. Hence, I think you probably would be listed as a student and if you just want to quit entirely the closed school discharge is definitely worth applying for.
Gio says
May 15, 2019 at 10:48 pmHi I attended wyotech college for a trade in HVAC school was sued and closed for wrongful and misleading students on so many things my question is I attended in 2007 and lawsuit was I believe in 2015 or so I paid off my private loan but couldn’t afford my federal loan and now is and has been in default for some time am I eligible for a borrower discharge and get my life back thank you very much
Travis Hornsby says
May 16, 2019 at 9:05 amBorrower defense to repayment sounds like it’d be your only option. https://borrowerdischarge.ed.gov/s/?language=en_US
GIOVANNI CIARAMITARO says
May 16, 2019 at 10:40 amThanks alot travis I appreciate that any advice on how to verbalize it so I have a shot on getting this removed
Travis Hornsby says
May 16, 2019 at 9:27 pmSure thing good luck!
GIOVANNI CIARAMITARO says
May 16, 2019 at 10:58 amIt won’t let me unless my enrollment was on or after June 1st 2010 I was in 2007 but def misled with my loans and interest included 100% on job placement totally bogus
Lora says
May 16, 2019 at 4:28 pmI am 100% disabled The only income is social security disability insurance (SSDI) and The Department Of Education has been taking money 10% out of my check. Because of this, I am currently now living in a homeless shelter. While I was attending Kapalan I had a loss of my son who was 19 and a donor. I was dealing with. I told the school about this but they continued to charge me they basically brushed me off.
How can I get this money back. I have tried several times and I have met deadlines and yet they continue to take money out. Can you direct me to where or whom I can get help with this situation?
Thank you,
Lora C
Travis Hornsby says
May 16, 2019 at 5:00 pmYou should apply for a disability discharge. Perhaps one of the lawyers on this might be able to help https://www.studentloanplanner.com/student-loan-lawyer/
Shay says
May 28, 2019 at 3:34 pmTravis – I attended Katharine Gibbs in 2008 school closed in 2009 while I was enrolled didn’t tell us the circumstance and changed name to SBI campus Stanford brown which is not accredited school… Fast forward there was a class action lawsuit to Stanford brown for fraud then they closed… I’ve been paying ppl to help with situation for years no help granted and I’m not understanding why I’m left with 41,000 loan due to a fraud school that they are aware of the credits don’t even transfer I couldn’t even continue my education because I would need to start over and I’m already in a scam debt… I’m in Ny any suggestions they are currently take my wages and tax offset… I’m finding out now there is school closed loan discharge ( do I qualify for that since I took out a loan for Katharine Gibbs that closed when I was enrolled I technically didn’t get a degree at Katharine Gibbs ) because when I finished it was Stanford Brown which I didn’t agree to that change and loan was taken out in beginning all together not like semesters
Travis Hornsby says
May 28, 2019 at 7:48 pmIf you transferred schools from a teach out plan (voluntarily or not) then you wouldnt qualify for closed school discharge and your only option would be to apply for borrower defense to repayment.
Shay says
May 28, 2019 at 8:57 pmOk so being that they put me in Sanford Brown involuntarily I should be included in the discharge that NY AG passed please read https://ag.ny.gov/press-release/ag-schneiderman-announces-groundbreaking-1025-million-dollar-settlement-profit
Taunja says
June 3, 2019 at 6:55 pmI am seeking advice. I went to Westwood and graduated and a year later myfedloan consolidation came on my credit. I’ve done all I know and they won’t remove it. I even talked with myfedloan and I have never been in default and they were paid and consolidated. How can I get it removed from my credit, I don’t owe!
Travis Hornsby says
June 4, 2019 at 4:11 pmSounds like you should talk to a student loan lawyer like Jay: jay@moneywiselaw.com
Taunja says
June 3, 2019 at 7:01 pmDeville Asset Management is the creditor that is trying to collect on student loans already paid and consolidated within myfedloan. That won’t provide me with anything and dispute comes back as verified but won’t give what has been verified or how.
Tiffany white says
June 16, 2019 at 10:33 pmMy collage closed in 2015 a few years after I dropped my classes due to fraud. I recieved a letter from the attorney general a year later reguarding student loan forgiveness. Enclosed was a list of things to complete. I wasnt able to do so because I couldnt remember my loggin and other codes for my classes I was in. My question is do you think I would be able to get my student loans erased?
Travis Hornsby says
June 17, 2019 at 10:05 pmI think if I was you I’d reach out to your state AG’s office sounds like they cared
Ed says
July 17, 2019 at 4:43 pmI keep seeing that if you attended a school and graduated within 120 days of the school closing that you may qualify for the Closed School Discharge. Is this correct? I’m seeing conflicting information.
Travis Hornsby says
July 18, 2019 at 7:27 amI believe that’s the case. Basically the closed school discharge if you qualify is much easier to get than borrower defense to repayment.
danh nguyen says
August 15, 2019 at 9:38 amI attended CHI institute in the 2004 , later it changed to Brightwood Institute. I was paying for it out of pocket; then later I had agreement with this school to pay monthly in the amount of $50 after I graduated. I had setup an autopayment with my bank for this remaining balance since graduation. Recently, Brightwood rejected my payments. The money sent back to my bank. Next, the debt collector sent me a letter which asked me to pay for the amount on the behalf of Brightwood. I did not want to pay to the debt collector, ONLY to Brightwood. Should I continue to pay for the balance with the debt collector? I greatly appreciate for any advise!
Travis Hornsby says
August 20, 2019 at 10:45 amYou really need an attorney I think in your state that knows consumer protection laws.
Stephen Dufour says
August 26, 2019 at 2:35 pmI went to Everst in Rochestet by, graduated in 08, school closed prob 5 to 8 years ago. I owed 16,000 when I left, couldnt make payments of close to 500 a month after graduation between the 2 loans. I ignored them. Over time they kept taking my taxes. Have taken close to 15,000 over time. Made a repayment plan. Couldnt keep paying $305 a month, went in default again, 2018 taxes, just took $11,400 in taxes again and I still owe around $20,000…my credit is around 500 becuz of loan..no in a program that I pay $25 a month for to keep in standing, but still defaulted
Travis Hornsby says
August 26, 2019 at 6:57 pmCan you try to consolidate it. Call the default resolution group at the Dept of Education. Their number is 800-621-3115. Consolidate it and get it on the REPAYE plan and that should start to fix your credit and spare you the tax refund garnishment.
Jason Cartelli says
August 30, 2019 at 6:47 pmI attended ITT Tech back in 2012-2015 and got 2 degrees. Now ITT is closed and I owe close to $86k due to student loans. I was in deferment for a while and now they said I can’t do it again and now I have to pay close to $435 per month. Between my health conditions, doctors and more, I can not make these payments. They threaten me to garnish my wages and my taxes unless I settle this. ITT lied to all of their students and I felt cheated on my education. What can I do to settle this?
Travis Hornsby says
September 1, 2019 at 9:55 amI’d try to rehab the debt and get it on an income based payment option while you attempt to get the debt discharged. It’s unfortunately not easy right now w the new Trump rules for discharge.
George Davenport says
September 9, 2019 at 9:22 amHello my name is George Davenport, I attend it ITT and the school closed down. last year my income tax was taken from not paying on student loan. what can i do to get my income tax back. or not have to go through my taxes being taken again?
Travis Hornsby says
September 9, 2019 at 3:03 pmSign up for the REPAYE program George. You can do this by calling your loan servicer or consolidating the loan to a direct loan.
Tim says
September 10, 2019 at 6:29 pmHiya,
I attended Westwood College ’07-’11, I recently discovered they closed when trying to retrieve a copy of my transcripts. Was initially under the impression that my loans were deferred but quickly discovered they had been sent to collection and sold countless times. Like many, it was next to impossible landing a gig in the preferred area of study so after years of being homeless or unemployed I’m finally in a place to start working on all of this. I don’t believe I qualify for the
loan discharge program but I’m curious how you would tackle the smoldering wreckage that is my life. As an Army Vet, I do feel like I was taken advantage of initially but I’m not looking for sympathy, just a way to start making things right. I’m certain the collection balance has increased pass ($80-90k) and my credit score is probably in the negatives by now, but I still want to try. Where would you start if you were me… consolidation? borrower defense? assume a new identity?
Thanks for taking the time to hear me out.
Travis Hornsby says
September 15, 2019 at 12:17 amYou need to contact a student loan attorney. Thank you for your service. https://www.studentloanplanner.com/student-loan-lawyer/
Shelley t says
September 14, 2019 at 12:26 amHi- I attended a nursing school that knowingly was losing it’s accreditation. But didnt notify us until after we signed up for the semesters and and too late to drop. I am having problems finding a bsn or msn program to take me from no accrediting school. I applied for a BorrowerDefense a few months ago. Do you think i have a chance of getting it and a refund? I make less $$ because i cant get into a school- thank you-
Travis Hornsby says
September 15, 2019 at 12:11 amThere’s certainly a shot but the govt has made it harder to get. I’d get on an income driven plan for now and work hard to get into a new program.
James Pearson says
September 20, 2019 at 3:35 pmI graduated from the art institute of portland back in 2012, I started a post back at another Portland State shortly after. I’ve returned from army service to find the institute is shut down and I can’t seem to get any info on my records. I’ve summited twice for my transcript and nothing has come back. I’m contacting my states records to see what they have. Should I seek some kind of discharge on my student loans? Let me know if you would need more info to answer the question. Thanks for your help.
Travis Hornsby says
September 25, 2019 at 10:35 amTry applying for the closed school discharge (you’re generally only eligible if the school closed down before you were able to earn a degree)
https://studentaid.ed.gov/sa/sites/default/files/closed-school-loan-discharge-form.pdf
They’re making it way harder to get any forgiveness just so you know, so I wish I could help more.
James Pearson says
September 25, 2019 at 1:33 pmThanks for getting back to me and I’ll give it a try.
Delia says
October 7, 2019 at 1:55 pmI enrolled in a program offered by America Career Training Travel School, it was 20 home-study lessons along with the three-week residential training.(between 1988-1990). Upon further research the school closed in 1990, due to fraud, misuse loans and lost its accreditation. I applied for a School Closure Loan Discharge.
The loan service provider was unable to approve my request based on additional information needed such as a transcript showing dates of attendance, separation dates, etc. I am unable to obtain this information as the school is no longer valid. The collection agency that has it now is showing an outstanding balance of $19, 397.04. With a notice of potential wage garnishment. Would I qualify for a School Closure Loan Discharge?
Travis Hornsby says
October 8, 2019 at 4:38 pmYou def need a student loan lawyer could be past the statute of limitations
zella says
October 13, 2019 at 7:51 pmAny private student loan forgiveness for argosy after graduation? even if paid back, can I get it?
Travis Hornsby says
October 17, 2019 at 3:45 pmVery unlikely
Alisha Adams says
October 15, 2019 at 1:34 amI attended ITT tech from 2010-2012. I had to withdraw from the program due to family issues with my mother on law who passed away in early November of 2012. I went on a LOA and then received a letter about 4 weeks later saying that I have been discharged from school. Since the school has been shut down since 2016, would I qualify for this?
Travis at Student Loan Planner says
October 30, 2019 at 1:20 pmThere’s tons of lawsuits around ITT Tech forgiveness right now, so I would suggest signing up for an income driven plan right now or exhausting your forbearance options and not going into default on it.
Alisha Adams says
October 30, 2019 at 7:31 pmI’m currently on REPAYE program through fedloan servicing
Angela S. says
October 30, 2019 at 12:31 pmI was wanting to change careers at middle age. In 2014, I got my Bachelor’s degree in Web Design & Development when I was 49 years old. I was not told that the technology field only hires the young people. I never could find a job in web design. I am now 56 years old and paying on students loans (Dept. of Education mostly)…..for myself…..and I don’t even have children! What a waste of time and money! Does this mean that I am NOT qualified for the Student Loan Discharge?
Travis at Student Loan Planner says
October 30, 2019 at 3:46 pmIt’s generally very hard to get so I wouldn’t be able to say without knowing lots of details about your situation.