U.S. NEWS: 3 Times College Closings Can Affect Student Loan Repayments

Career College Central Summary:

  • By now, you've probably heard the news about the closing and recent bankruptcy filing announcement of Corinthian Colleges, one of the largest for-profit higher education organizations in the U.S. At its peak, the organization enrolled almost 80,000 students per year.
  • In April, the organization announced the immediate closing of its remaining 26 campuses, affecting nearly 16,000 students.
  • The coverage of these events, especially those that focused on the affected students' loan debts, left many consumers confused about their responsibilities if their college should close. While the Corinthian situation is unique, the majority of the time you can expect to encounter one of the the following scenarios when it comes to student loans and college closings.
  • While most school closings are planned months, if not years, in advance, there have been situations where schools have closed suddenly with little if any notice to affected students. If you are attending or have recently attended a school that closes, you may be eligible to have your federal student loans discharged. To be eligible for this discharge, a borrower must meet all of the following criteria.

    • You must have been enrolled in the school within 120 days of the school closing
    • You must not have completed the course work required to receive the credential
    • You must not be completing a comparable "teach-out" or transfer program at another institution
  • If you have federal student loans and meet these criteria, you can request a loan discharge application from your loan holder. While there is no time limit as to when a borrower must apply for this discharge, if the school closed some time ago, it may be difficult for the borrower to prove they met the criteria for discharge, particularly proving that they were enrolled within that 120-day window.
  • If your school closes, it's always best to apply for the discharge right away, preferably before you start receiving bills for the loans.

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