If you were unable to complete your program because your school closed while you were enrolled, or if you withdrew from school shortly before it closed, you may be eligible for a closed school discharge. Additionally, if the campus you were attending closed, but the rest of the school’s campuses remained open, you may also be eligible for a closed school discharge.
If your closed school discharge application is granted, the Department will cancel the loans you borrowed to attend the closed school, give you a refund of payments made on those loans, and have any negative credit history for those loans deleted from your credit report.
When your college or university closes while you are enrolled, you have a couple of options. You can choose to complete your program through a teach-out (either at the same school or at another school) or you can apply to have your student loans canceled. If you complete your program via a teach-out, you will not be eligible for a closed school discharge.
What is a teach-out?
When a school or campus closes, it will create a teach-out plan. The teach-out plan may be at the closing school itself or the closing school may work with other schools or campuses nearby to allow students to finish their program. If your school or campus closes, and you decide to continue your education through a teach-out, you will not be eligible to have your loans canceled under the Closed School relief program. Instead, it may be better to take the closed school discharge and later transfer your credits to another school outside of the teach-out agreement. You will still be eligible for Closed School relief if you transfer to a program outside of the teach-out plan.
I Did Not Complete My Program and My School Closed. How Do I Get Closed School Relief?
If you did not complete your program and were enrolled in the school when it closed, or withdrew from the school within 180 days of it closing, you may be eligible for Closed School relief. You can apply for a closed school discharge by filling out a closed school discharge application and submitting it to your federal loan servicer.
New rules for the Closed School program are taking effect on July 1, 2023. Under the new rules, some borrowers will not have to apply for a Closed School discharge. Instead, the Department of Education will automatically give borrowers a closed school discharge and cancel their student loans within one year of the school’s closure if the borrowers do not accept a teach-out or transfer their credits to a new school. Additionally, if a student fails to finish their education through the teach-out program, the Department will automatically grant a Closed School discharge within one year of leaving that program.
Do Not Rush to Complete Your Program via a Teach-Out
If you’ve learned that your school is closing, it is important to take your time before making a decision about what to do next. If the school is pushing you to enroll right away in a teach-out program or is pushing you to complete the same program at another campus, you should carefully consider your options. You will not be eligible for a closed school discharge if you complete the program through a teach-out.
If you want to complete your education, it may be better to consider transferring your credits to another school outside of the teach-out. You may still transfer credits to another school even if you receive a closed school discharge. Be aware that some schools are reluctant to accept credits from other schools.
Getting Transcripts and Records From Closed Schools
You may have trouble getting your academic records after a school has closed. Contact the state licensing agency in the state in which the school was located to get information about locating your records. Prior to closing, schools are supposed to come up with a plan for students to access academic records in the future. Your school must give you information about where you can get those records.
Closed Schools and Veterans
If you used your GI Bill to attend a school that closed, you may be able to restore some of your GI Bill benefits. Visit the GI Bill restoration website for more information about applying for benefit restoration, or contact the VA’s Education Call Center at 1-888-442-4551.
