Can I Get Student Loan Forgiveness if My School Closed?

Looking to get your loans forgiven because your school closed?

You may be able to do that.

Here’s what I mean.

Yes, it’s possible to get federal student loan forgiveness if your school closed.

Eligible Federal Loans

Pretty much, all your loans that are federal are eligible for closed school dischargeClosed School DischargeA federal loan discharge available to borrowers whose school closed while they were enrolled or shortly after they withdrew, before they could complete their program of study. no matter of your educational program of study. This includes: William D. Ford Federal Direct Loans, the Federal Family Education Loans (FFEL Loans), the Perkins LoanPerkins LoanA low-interest federal student loan for borrowers with exceptional financial need, issued by schools under a now-discontinued program. New Perkins Loans have not been made since 2017, but many existing balances are still in repayment., Parent Plus Loans, Stafford Loans, and consolidation loans.

But few people will be able to do so.

About Private Student Loans

Private loans don’t have a similar program to the federal government’s for closed school discharges. In my experience, you have only two options to get rid of your loan debt: settlement or bankruptcy.

Why?

The U.S. Department of EducationU.S. Department of Education (ED)The federal agency that oversees federal student aid programs, issues regulations for federal student loans, and is the ultimate lender on Direct Loans.’s eligibility requirements for a closed school loan discharge are strict.

You qualify if you did not complete your coursework at a comparable program of study at another school through a teach-out and:

• You were enrolled when the school closed or
• You were on an approved leave of absence when the school closed or
• Your school closed within 120 days after you withdrew

In other words, you’re eligible for a closed school discharge only if you couldn’t complete your education because the school closed.

What Happens to my Degree if the School Closes

The short answer is nothing.

Your degree remains valid if your school closes.

But, and here’s the big problem as you already know, is that your degree is, for the most part, worthless.

You’re likely stuck paying for a degree you got almost no value from.

Transferring credits isn’t an option.

The hard truth is this:

You’re likely stuck paying for a degree you got almost no value from.

Is there any hope?

Possibly.

How to Find the School Closure Date

Okay, so you’re pretty sure you attended the school before it closed but you’re not 100% certain.

Here’s what to do:

Basically, this page is a spreadsheet that lists the closure dates for schools of higher education that participated in the federal student aidFederal Student Aid (FSA)The office within the U.S. Department of Education that manages federal grants, work-study, and student loans. It runs the FAFSA, the StudentAid.gov website, and oversees the federal loan servicers. program.

Loan Discharge Application School Closure Form

Now that you know you meet the eligibility requirements, your next step is to submit a loan discharge application.

To do that, you’ll first need to download the Loan Discharge Application: School Closure form. (You can also ask your loan servicerLoan ServicerThe company that manages a borrower's federal student loan account, processes payments, and handles applications for repayment plans, deferment, forbearance, and forgiveness on behalf of the U.S. Department of Education. to send it to you.)

Completing the form is pretty easy so I won’t go over it here.

But if you need help, call the federal student aid phone number at 800-433-3423.

You’ll use the same form whether you’re the student borrower or parent borrower.

Where to Submit Closed Discharge Application

Related: How to Use the National Student Loan Data System to View Your Student Loans

What Happens After You Submit the Application

Once submitted, you remain responsible for your monthly loan payments until your application is approved.

More on how long that takes in a sec.

So if you want to avoid paying on the loan while you wait on a decision, see if you qualify for a $0 payment under one of the income-driven repaymentIncome-Driven Repayment (IDR)A category of federal student loan repayment plans that calculate monthly payments based on income and family size rather than loan balance. Any remaining balance can be forgiven after 20–25 years of qualifying payments. plans, ask for an administrative forbearance, or ask for a deferment.

There’s no time limit on how long it takes to get a decision on your application.

Be prepared to wait.

And be prepared to make sure your loans don’t go into defaultDefaultThe status of a federal student loan after the borrower has failed to make required payments for 270 days. Default can trigger collection actions such as wage garnishment, tax refund offset, and damage to credit reports..

Because if that happens, you’re exposed to wage garnishment, getting your tax refund taken, or your Social Security benefits offset.