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Closed School Loan Discharge

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The closed school discharge is available if you attended a school that closed while you were enrolled or if you withdrew 120 days before the school’s closure (called a “lookback period”). The government may extend the 120 day period in certain circumstances. In new rules announced in September 2019, the Department changed the time period to 180 days for loans issued after July 1, 2020. These rules went into effect July 1, 2020, but this could change again due to legal challenges or other factors.

Only loans received at least in part on or after January 1, 1986 may be discharged. FFEL and Direct Stafford loans, PLUS, and Perkins loans are eligible. Parent PLUS loan borrowers should be eligible if the school closed before the child completed the program.

 

Consolidation loans are trickier. A consolidation loan usually consists of a number of underlying loans. If any of these underlying loans could be canceled, you can apply for a closed school cancellation for these loans only. If granted, you will receive a credit for the amount of the underlying loans related to the closed school.

Recent School Closures

This is a partial list of the schools that have closed since 2016. There is more information about these closures and more schools listed on the Department’s web site.  

Charlotte School of Law: Charlotte School of Law was a for-profit law school in North Carolina that closed in August 2017. See the Department’s fact sheet. The Department of Education announced that it would extend the 120-day lookback period for students who attended Charlotte school of law and would grant eligibility for students who attended the school on or after December 31, 2016.

Corinthian, Inc.: Corinthian was a large for-profit chain of schools. The company closed schools over time and then filed for bankruptcy in 2015. The schools included Everest (College, University, on-line), Heald College, and WyoTech.

The Secretary of Education extended the 120-day time frame for closed school discharge eligibility to include any Corinthian student who withdrew from one of its closed schools on or after June 20, 2014. The Department has posted extensive information about debt relief for Corinthian students and has developed special borrower defense discharge processes for specific groups of Corinthian Colleges students.

Argosy University, Art Institutes, and South University: The Art Institutes, Argosy University, and South University were owned by the same corporate owners, first EDMC and then Dream Center Education Holdings. When the schools changed ownership in 2016, a number of campuses closed. Then, in 2019, Dream Center Education Holdings entered receivership (often a precursor to bankruptcy) and closed almost all of its remaining Art Institutes, Argosy, and South University campuses. The Department posted information about the Dream Center closures here and here.

In November 2019, the Department announced it would automatically cancel loans and restore Pell eligibility for students who attended Art Institute of Colorado or the Illinois Institute of Art between January 20, 2018 and December 31, 2018. The Department also announced that it would extend the lookback period for closed school discharges for students who attended another 24 Dream Center schools that closed in December 2018. Students who attended a Dream Center campus on or after June 29, 2018 (or on or after January 20, 2018 for borrowers who attendedjust the Illinois Institute of Art campuses or the Art Institute of Colorado campuses) and who did not complete their program or transfer the credits attained at a Dream Center school to the same program at another school may be eligible for a closed school discharge.

Student Defense has posted a guide to extended closed school loan relief for Dream Center Students.

Education Corp. of America: The Education Corp. of America was the corporate owner of Brightwood Career Institute, Brightwood College, Ecotech Institute, Golf Academy of America, New England College of Business, and Virginia College. After months of financial troubles and declining student enrollment, the company announced its closure in December 2018 and filed for a receivership, closing campuses in 18 states. The Department has issued a fact sheet for students affected by the company’s closure.

Globe University and Minnesota School of Business: Globe University and Minnesota School of Business was a for-profit school that filed for bankruptcy in November 2019. The Attorney General of Minnesota sued the school for defrauding students enrolled in its criminal justice program. The U.S. Department of Education extended the lookback period for students from Globe University and Minnesota School of Business, and students who attended the schools on or after September 8, 2016 are eligible for a closed school discharge. The Department has issued a fact sheet for students affected by the schools’ closure. The Minnesota Office of Higher Education has posted information for students who attended these schools.

ITT Schools: The parent company of ITT Technical Institute and Daniel Webster College stopped offering courses on September 6, 2016. The company since filed for bankruptcy. On August 26, 2021, the Department announced that it would allow borrowers who withdrew from ITT on or after March 31, 2008 to receive a closed school discharge. The Department has posted information specifically for ITT students, including answers to FAQs. The Project on Predatory Student lending has posted more information for former ITT students, including about a group of former ITT Tech students who filed claims in ITT’s bankruptcy proceedings in the Southern District of Indiana. In June 2019, the CFPB and 44 states’ attorneys general settled with Student CU Connect CUSO LLC (or the CUSO), a group of credit unions that issued private loans to ITT students, which stopped the collection of all outstanding private loans issued by that lender.

Regency: All Regency Beauty Institutes closed on September 28, 2016. At the time of the closure, Regency was operating in 19 states at 79 locations. The Department of Education has posted information related to this closure, including a series of national webinars for Regency students.

Vatterott College. In December 2018, Vatterott College, which also included L’Ecole Culinaire and ex’treme Institute, announced it would immediately close its school campuses.

 

 

 

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