School Closure Student Loan Discharge
Simply said, some loans can be 100% discharged when a school is closed
prior to the student’s completion of the educational program. A
student that qualifies for loan discharge will no longer be required to
make payments and may be entitled to receive a refund. Other possible
benefits of loan discharge are:
- Eliminates wage garnishment and tax offsets
- Deletion of negative credit reporting relating to default
- Removal of the loan from default status
This page focuses on school-closure discharge for federal student loans. For
private student loans, discharge policies vary so it’s best to check to with the original lender.
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Who qualifies for a loan discharge due to school closure?
The following federal loans may be eligible for discharge when certain
circumstances are met:
- Direct Loans
- FFEL Loans
- Federal Perkins Loans
You can seek to discharge these loans under the following circumstances:
- The school closed while you were enrolled which causes you to not complete
the program. For these purposes, a person on an authorized leave of absence
is considered an enrolled student.
- You withdraw from the program and the school closes within 120 days.
If any of the following apply, your loans
will not be eligible for discharge:
- You completed the required classes for the program, regardless of whether
you received a certificate of completion.
- You are enrolled at a comparable program at another educational institution.
- The school closes more than 120 days after withdrawal.
If you transfer your credits to another school for an entirely different
program, then your loans for the closed-school might still be dischargeable.
Similarly, if the school issued a certificate of completion prematurely
(without the student fully completing the actual program) prior to closing,
then the loans might still be dischargeable.
What happens if my discharge application is denied?
Upon being denied, the borrower will be held responsible for paying the
loan. Denials for “school closure” discharge cannot be appealed.
In this situation it would be prudent to explore repayment plans, such
as the IBR Payment Plan. Furthermore, you can conduct research to determine
whether a tuition recovery fund or performance bond exists to cover the damages.
Get Help With Your School-Closure Loan Discharge Application
At the Law Office of Simon Goldenberg, PLLC, our attorneys help people
resolve a variety of issues that arise with student loans. We provide
assistance with respect to completing and submitting student loan discharge
applications. As the process can easily become overwhelming, our legal
staff makes it easier for student borrowers to pursue remedies with their
lenders and the Department of Education.
Do you owe
student loan debt for a closed school? Contact us at (888) 301-0584 for a free evaluation!
With the help of our seasoned
New York student loan lawyers, you can rest assured that we will leave no stone unturned in pursuing
a resolution. There's no better time then now to explore your debt
relief options. Call today.