My school closed and now I can’t graduate. What happens to my student loans?
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If your college or university closes and you accept a “teach-out” to complete your program at another school, you will be responsible for repaying all of your student loans. If you decline, you may be able to have your loan discharged.
If the college you’re enrolled in shuts down, there can be a lot of uncertainty about what comes next. If your school announced that it is closing, they may offer you a “teach out ” to complete your program and receive your degree or certificate.
- If you accept a “teach-out” to complete your program at your school or another school, you will be responsible for repaying your student loans.
- If you decline a “teach-out” offer and the school closes, you may not have to pay back your federal student loans. If you qualify for a loan discharge, the Department of Education will cancel your federal student loans one year after your school closes. You can receive an earlier discharge if you apply for it after the Department of Education confirms the school’s closure. Generally, borrowers with private student loans will still be responsible for repaying their private student loans. Some states may have programs that assist students with private student loans in the event of a school closure. Some private student lenders may offer options to assist certain borrowers in this situation. You can contact your lender to determine if you are eligible to have your private student loans discharged based on your school closing.
- If you later enroll in a similar program at another school and receive credit for courses you already completed, you may still need to pay back your federal loans if you transfer credits or hours from the closed school or participate in the “teach out.” If you did not participate in a “teach out,” and otherwise meet the requirements for a closed school discharge, your loans may be forgiven. Contact the Department of Education for more information.
If you can’t afford to repay your private student loan, you can contact your student loan servicer immediately to learn about your options. And if you run into trouble with your student loan servicer, you can submit a complaint to the CFPB online or by calling (855) 411-CFPB (2372).