Who Qualifies
You qualify for closed school discharge if: 1. You were enrolled at the school when it closed, OR 2. You withdrew within 180 days before the school closed (expanded from 120 days in 2022), AND 3. You did not complete your program at another school through a teach-out agreement. If you transferred your credits and completed a comparable program elsewhere, you generally don't qualify.
This applies to all federal student loans (Direct, FFEL, Perkins) taken for enrollment at the closed school. It covers the full loan amount plus any interest and fees paid. You may also receive a refund of amounts already paid on the loans.
Automatic vs. Application Discharge
Since 2022, the Department of Education has automatically discharged loans for borrowers who were enrolled at the time of closure and didn't subsequently enroll elsewhere within 3 years. If you qualify for automatic discharge, you don't need to do anything -- the discharge happens without an application.
If you weren't automatically discharged (perhaps because you enrolled at another school or withdrew more than 180 days before closure), you can apply manually. Submit the Closed School Discharge Application to your loan servicer with documentation of your enrollment dates.
Major Closures and Group Discharges
Large-scale school closures (ITT Technical Institute, Corinthian Colleges, Art Institutes, etc.) have resulted in group discharges affecting hundreds of thousands of borrowers. The Department of Education has proactively identified and discharged loans for borrowers at these institutions. Check studentaid.gov for announcements about your specific school.
If your school was flagged for fraud but hasn't closed, you may qualify for Borrower Defense to Repayment instead. This is a separate program for borrowers defrauded by their school, regardless of whether the school is still open.
Frequently Asked Questions
Does closed school discharge affect my credit?
The loan(s) will be removed from your credit report once discharged. The original negative marks from any missed payments may remain for the standard 7-year period from the date of first delinquency, but the outstanding balance will be eliminated.
Can I get a refund of payments I already made?
Yes. Closed school discharge includes a refund of all payments made on the discharged loans, including voluntary payments, wage garnishment collections, and tax refund offsets. The refund may take several months to process.
What if I completed most of my program before the school closed?
You still qualify if you were enrolled when the school closed and didn't complete the program through a teach-out. The percentage of completion doesn't matter -- even if you were one class away from graduating, you qualify for full discharge.
Check your bankruptcy discharge eligibility with our free screening tool.
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