There are many schools in the US, which closed their doors permanently. If your school closed while you are enrolling at the school, your federal student loans might be discharged. There are various ways to discharge your student loans. Closed School Loan Discharge Program is one of the quickest ways of discharging from your federal student loans. There is a little difference between Student Loan Forgiveness Programs and Closed School Loan Discharge. If you get student loan forgiveness, you have to work in public service within a specified period. Within the Closed School Loan Discharge Program, your student loans will be canceled if you are not able to pay them. In this article, you will learn about student loan discharge, Closed School Student loan discharge program and application, eligibility requirements for closed school loan discharge, and conditions make you ineligible for the program.
Closed School Student loan discharge program
Are you a student unable to complete your studies in a school you are enrolling? Well, if the answer is yes, there is a chance for you to get rid of your student loans. In 2019, you have the opportunity to wipe out your student loans. The Department of Education has a program called: Closed School Loan Discharge Program. This works in favor of you in certain circumstances. For example, if your school is closed while you are enrolling or shortly after your withdrawal, you might get a discharge. Nevertheless, if your school is closed more than 120 days after your withdrawal, you may not be eligible for a loan discharge.
Here is another issue. Did you continue your studies at any other school? If the answer is yes, you may not get a closed school discharge for your student loans.
There are specific requirements that make you eligible for the loan discharge. Before knowing the requirements, figure out if your school is among the closed schools here. To prove you are a student of one of the closed schools, you need your transcript of records or any applicable documentation. If you do not have a transcript of records, get in touch with the state government licensing department.
Eligibility for the program
As we already mentioned above, the first criteria to be eligible for loan discharge is your school should be closed while you were enrolling. If you have completed your studies, you may not qualify for closed school student loan discharge.
The Closed School Student loan discharge is a process, and if you meet the requirements, you will automatically be discharged from your federal student loans.
Let’s sort out the requirements:
- Your school closed its doors permanently, while you were enrolling at the closed school and you did not get the chance to complete your study program
- You may be eligible if you have approval for your absence when your school is closed
- You withdrew no longer than 120 days after your school is closed
If you meet these requirements above, you may be eligible for Closed School loan discharge.
Ineligible for discharge under these conditions
You can figure out, under which conditions you are not eligible for your student loan discharge in this section. Conditions that make you ineligible for a discharge of your federal student loans are:
- You completed your studies at any other school with a similar educational program or had a teach-out agreement
- You withdrew from your school, more than 120 days it closed. Apart from some exceptional circumstances
- You have completed your studies at the closed school, even though you have not got any diploma or degree certificate
If you are not eligible for Closed School loan discharge, you might as well learn more about your alternatives, such as Borrower’s Defense Against Repayment Program or Student Loan Forgiveness Programs.
How to apply the Closed School Student loan discharge
After figuring out that you are eligible for Closed School loan discharge, you can now apply to the program. The application process will start when you get in touch with your loan servicer. Your loan servicer will inform you about the progress on your discharge application and will tell you if you need to continue to pay your monthly student loans till you get the closed school discharge. Otherwise, avoiding your monthly payments may cause you financial problems.
You have to fill out the loan discharge form to apply to the Closed School discharge. The form consists of eight sections, and the last five sections are about the instructions which can guide you through completing the first three sections. Make sure you follow all the instructions and complete each part correctly. After completing the loan discharge form, send the application via approved mail.
If your discharge is granted, you will not have any obligation to pay your federal student loans. The good news is, you can get back the money you paid. The Department of Education makes sure every borrower receive their money back.
There is an Automatic Closed School Loan discharge
This makes you eligible to receive an automatic discharge from your federal student loans. Automatic Closed School Student loan relief works only if you meet all the requirements of the program. You will get the notification from your loan servicer about your discharge from federal student loans. This will be granted by the Department of Education.
Approval of your Closed School Student loan forgiveness means you are relieved from your federal student loans. These are the benefits of discharging from your federal student loans:
- You will not have any obligation to pay your federal student loans
- Your credit history will be cleaned from your loan record or any student loan repayment history
- You will get the compensation for your any payments
Denial of your CSLD means you are obliged to pay your remaining federal student loans. In this case, you may apply to False Certification Discharge, and the Department of Education can review your denial. If there are any conditions like here, you may be eligible to discharge of your federal student loans.
Are you interested in whether there is any deadline to apply for the Closed School loan discharge program? Well, fortunately, there is no deadline for application.
Information about loan discharge and other programs available
Apart from Student Loan Forgiveness Programs, there are discharge programs available as well. The main difference between student loan forgiveness and loan discharge is, the borrowers will get rid of their student loans permanently if they are eligible for loan discharge.
There are various types. These are:
- Death Discharge. After submitting the proof of death, you will be discharged from your student loans.
- Bankruptcy Discharge. You may get a bankruptcy discharge in certain circumstances for your federal student loans if you prove your bankruptcy.
- Total and Permanent Disability Discharge. Your total or permanent disability may discharge you from your federal student loans.
- False Certification Discharge
- Closed School Loan Discharge
We have already talked about the CSLD program. If you find out that you are eligible for this student loan discharge, this means you know all the required information. If you are ineligible for student loan forgiveness, you may learn from here whether you are qualified for any other federal aid available out there.