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Closed School Loan Discharge – Who is Eligible.

Closed School Loan Discharge

Can my student loans be forgiven if my school closed?

If a school closed while you were enrolled or not long after you withdrew there are options available to eliminate your student loan debt. A closed school loan discharge is one of the options that can be used if you meet certain eligibility requirements.

 A school closing, while you are still enrolled, is common, therefore, you should know what to do if this happens to you. This guide will go over your closed school loan options, how a school closure affects you, and what to do if you have questions.

What Happens When Your School Closes

When a school closes, you are left without a degree and a mountain of debt from student loans used to finance your education. The Department of Education will confirm and announce the school closure and provide you with information about managing your student loans.


  • You will receive a letter that will provide you with the information needed to manage your student loans and obtaining your academic records.
  • You can choose to either enroll in another school or apply for a discharge of your student loans obtained to attend the school.
  • A closed school discharge applies only to the federal student loans that were used to attend the school that closed.
  • If you are eligible for an automatic discharge of your student loans, you will receive notification from your loan servicer.


This section discussed the effects that a school closure has on students and what happens when a school closes. The next section will discuss what a closed school discharge is and the eligibility requirements to apply for this discharge.

Eligibility Requirements For Closed School Discharge

You must meet certain requirements to be eligible for a closed school discharge to be applied to your federally-funded student loans. If you meet these requirements and your application is approved, your obligation to repay these student loans will be lifted.


  • You must have been enrolled in the school or withdrew no more than 120-180 days before the school closed, depending on your first loan disbursement.
  • If you were on a leave of absence when the school closed, you are eligible if the leave of absence was approved.
  • You must not have enrolled in another school with a similar program through a teach-out program or by transferring your academic credits.
  • The school closure must have prevented you from completing your education program regardless of whether you received a certificate or diploma.
  • You must have received a student loan through the William D. Ford Direct loan program, Federal Family Education Loan, or through a Federal Perkins loan.


In this section, you learned the basic qualifications and eligibility requirements for the closed school discharge and what this discharge means. The next section will go over the process of the closed school loan discharge and how to apply for one.

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Closed School Loan Discharge Process

If you are eligible for a closed school discharge, there are two ways that this option can be applied to your student loans. You can complete an application for a discharge or you can wait 3 years for the discharge to automatically be applied to your student loans.


  • If you do not want to wait three years for an automatic discharge, you can contact your loan service provider to complete an application.
  • If you attended a school that closed between Nov. 1, 2013- July 1, 2020, the Department of Education will automatically initiate the discharge process.
  • You will need to continue making payments on your student loans until your application has been processed and approved to avoid defaulting on your loans.
  • If you are approved for the discharge, payments made on the loan may be refunded, and negative information may be removed from your credit report.
  • If your application is denied, you will need to speak with your loan servicer for other options and your repayment obligation will remain in place.


This section summarized the process of the closed school loan discharge and what happens when your application is approved or denied. The next section will go over other options that are available when your school closes and how to take advantage of these options.

Closed School Loan Discharge Alternatives

There are other ways to manage your federally-funded student loans besides applying for a closed school discharge or waiting for a discharge to be applied. If you received private funding to finance your education, these alternatives may or may not apply, you will need to contact your lender for more information.


  • You can apply for a forgiveness program that will cancel your loan balance after you have completed the terms of the program.
  • Some states have a recovery fund that can be applied to education expenses not covered or reimbursed under another program.
  • If you were defrauded or coerced to obtain loans by the school that closed, you can apply for the Borrowers’ Defense to Repayment Discharge.
  • You can find out if you can continue a similar education program at another school by contacting the closed school.
  • Find out if you are eligible for an unpaid refund discharge or other forms of discharge by contacting your loan service provider.


This section discussed alternatives to the closed school discharge, the process of receiving these options, and what the qualifications are for these options. The next section will summarize what you have learned in this guide and what to do if you need assistance applying for this discharge.

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This guide went into detail about how a school closure affects you and what you can do to receive a closed school loan discharge. It briefly discussed other alternatives and other routes you can take to help eliminate your student loan debt through loan discharge and/or loan forgiveness.

If you still have questions about this type of student loan discharge or need assistance applying for one, help is available to you. Call our office today to speak with an expert that specializes in managing student loan debt to find out how we can help you.