Did your college or trade school close while you were enrolled? You may qualify for full federal student loan discharge. Here's how to apply and what to expect.
If your school closed while you were enrolled or within 120 days of your withdrawal, you qualify for Closed School Discharge of federal student loans. This includes Direct Loans, FFEL, and Perkins Loans. The discharge is automatic for many borrowers, but you can also apply directly to speed up the process.
Closed School Discharge is a federal program that cancels your federal student loans if your school closed before you could complete your program. This relief applies to:
Private Loans Not Included: Closed School Discharge only applies to federal student loans. Private student loans are not eligible. However, some private lenders offer their own closure discharge programs — contact your lender directly.
To qualify for Closed School Discharge, you must meet ALL of these criteria:
| Requirement | Details |
|---|---|
| School closure timing | School closed while enrolled OR within 120 days of withdrawal |
| No degree/certificate | Did not complete program before closure |
| No teach-out | Didn't complete similar program through teach-out agreement |
| Federal loans | Have eligible federal student loans for the closed school |
You qualify if your school closed:
Example: You withdrew from Corinthian Colleges on January 1, 2015. The school closed on April 15, 2015 (104 days later). You qualify for discharge.
If your school arranged a "teach-out" with another institution, you may still qualify for discharge if you:
The U.S. Department of Education may automatically discharge loans for certain school closures. You'll receive a notice if you qualify. Automatic discharge occurs when:
Timeline: Automatic discharges typically process within 6-12 months of school closure.
If you don't receive automatic discharge, apply directly. This is often faster than waiting.
Collect evidence that your school closed and you were enrolled:
Get the Closed School Loan Discharge Application from:
The form is OMB Control Number 1845-0073. It's free to apply — never pay a company to help with discharge.
Fill out all sections accurately:
Send your completed application to the servicer for EACH loan. Find your servicer at StudentAid.gov.
Submission methods:
Servicers have 60 days to review your application. Possible outcomes:
You may qualify for False Certification Discharge if the school falsely certified your loan eligibility. Common scenarios:
If your school misled you or violated state law, you may qualify for Borrower Defense discharge. This covers:
Apply at: studentaid.gov/borrower-defense
If you withdrew and the school owed you a refund but didn't pay it (and subsequently closed), you may qualify for discharge of the portion of loans that should have been refunded.
Some states offer additional relief for closed school victims:
Recent Closures: Schools that closed in recent years and may qualify borrowers include: ITT Technical Institute (2016), Corinthian Colleges (2015), Westwood College (2017), Vatterott College (2018), Education Corporation of America (2018), and many COVID-related closures (2020-2021).
Once approved:
You'll receive refunds for:
Discharged loans should be reported as:
Tax Implications: Closed School Discharge is generally NOT taxable income under current law (through 2025). The American Rescue Plan Act of 2021 made most student loan discharges tax-free at the federal level through December 31, 2025.
Many companies claim to help with student loan discharge for a fee. These are often scams. Remember:
If student loan stress led to other debt problems, our free Debt Validation Letter Generator can help you dispute collection accounts.
Generate Your Free Debt Validation LetterAutomatic discharges take 6-12 months. Applications typically process within 60-90 days. Complex cases or high volumes may take longer. Follow up with your servicer monthly.
Yes. You'll receive refunds for payments made after the school closed and during the application review period. This includes any fees, interest, or collection costs assessed.
No. Closed School Discharge only applies to federal student loans. However, contact your private lender — some offer their own closure discharge programs. State tuition recovery funds may also help.
If you transferred credits and completed a similar program at another school, you generally don't qualify. However, if the credits didn't transfer or you couldn't complete due to the closure, you may still qualify.
No. Discharged loans are reported as "discharged in full" — not negative. Late payments before closure may remain but shouldn't worsen. Overall, discharge often improves credit by removing debt burden.
Yes, if you have new evidence or if your circumstances change. You can also appeal a denial through your loan servicer. Consider consulting a student loan attorney for complex cases.