Loan Forgiveness Announced for Thousands of Students Who Attended Closed Colleges

The U.S. Department of Education will forgive $150 million in federal student loan debt.

On December 13, 2018, the U.S. Department of Education announced it would forgive $150 million in federal student loans for students who attended a closed school.

Under federal regulations, Direct Loan, FFEL, and Perkins Loan program loans qualify for automatic forgiveness if an eligible borrower—or, when applicable, the dependent child on whose behalf a parent took out a PLUS loan—took out the loan to attend a school that closed on or after November 1, 2013. (34 C.F.R. § 685.214(c), 34 C.F.R. § 682.402(d)(8)(ii), and 34 C.F.R. § 674.33(g)(ii)). (To learn about different types of federal student loans, see Overview of Student Loans.)

Borrowers qualify for an automatic closed school discharge if they:

  • were enrolled when the school closed; or
  • withdrew not more than 120 days before the school closed; or
  • if approved by the Department of Education, withdrew more than 120 days before the school closed; and
  • didn't enroll at another Title IV-eligible school within three years of school's closure date.

The Department of Education has already identified about 15,000 people who are eligible for automatic debt cancellation.

Borrowers who don't want to wait three years for an automatic discharge may apply as soon as the Department of Education confirms the school's closure date.

If you don't receive an automatic discharge after three years—but you otherwise meet eligibility requirements for a closed school discharge—you may apply for loan forgiveness. Contact your loan servicer to get information about how to submit an application. (To learn about other kinds of federal student loan forgiveness programs, see Student Loan Relief: Canceling Your Loans. Be aware that if you don't qualify for a closed school discharge, you might qualify based on a borrower defense to repayment.)

For more information on automatic closed school discharges, including eligibility criteria, review the Department of Education's December 13, 2018 announcement. You can also go to the Department of Education's website to get more information about closed school discharges.

Effective Date: December 13, 2018