Over the last 15 years, several college students and graduates have been shocked to learn that their schools have shut down. These schools recruited them to certain programs, encouraged them to take loans, provided classes and grades, but lost their accreditation and shut down.
Because the schools lost accreditation and no longer exist, this brings the education and degrees of the graduates into question.
In most cases, students spent years pursuing degrees in health care, trades, or other technical fields that would have paid lucrative salaries. Their earnings would have more than paid off the loans while helping to provide a comfortable life for graduates and their families.
Through no fault of their own, college graduates lost earning power. Thankfully, the federal government has lent a hand to help some borrowers to complete their programs elsewhere if needed while also assisting with debt relief.
Those criteria for federal relief via closed school discharge, however, are rather stringent. They do not include a large number of borrowers who could receive relief through assistance from an attorney-based student loan modification service such as Iron Fist Legal.
What Is Closed School Discharge?
Many students directly affected by their schools’ loss of accreditation and closure may qualify for student loan discharge. This means that the federal government will erase the student loan debt of certain borrowers.
Do I Qualify to Get My Loans Discharged?
Borrowers must meet certain specific criteria set by the US Department of Education to qualify for automatic discharge.
First, the borrower must have received assistance from either the William D. Ford Federal Direct Loan Program, the Federal Family Education Loan or FEEL Program, or a Perkins Loan.
Other criteria that a borrower must meet for automatic discharge include:
- The borrower was enrolled at the time of the school’s closure
- The borrower was on administration-approved student leave of absence when the school closed
- The school closed 120 days after the borrower withdrew from school
Although these categories are quite strict, many borrowers could potentially obtain relief. Some borrowers experienced undue pressure from some of these closed schools to obtain student loans and even felt compelled to take out more than they needed. Others suffered when school programs did not match claims made about the school experience or earning potential after graduation.
Students who have received private loans do not qualify for federal debt relief. According to the federal government, however, borrowers may obtain some relief here. Some states have set up programs to assist borrowers if their school closed. In many cases, the lenders themselves have set up relief programs to modify terms of the loan temporarily or permanently.
An attorney-based student loan modification expert can investigate whether or not you fit into the gray areas in either public or private student loans and qualify for help.
What Factors Could Disqualify Me?
Borrowers who fall into the following categories cannot receive automatic student loan discharge:
- The borrower withdrew more than 120 days before the school shut down
- The borrower completed program through another school via a teachout, a transfer of credits to another school, or by other means
- The borrower completed all coursework before the school closed
- The borrower cannot receive a federal student loan discharge if their loans all came from private sector sources
Though the federal government established a very narrow gate for automatic relief through closed school discharge, many others could potentially receive a modification. If you do not qualify for an automatic discharge or other forms of relief, read further to learn more about how you can get help to modify your loan terms.
School Closures over the Past Decade, Including 2019
In the last decade, several colleges and universities shut down. Under the Obama administration, the Department of Education stripped federal recognition from the Accrediting Council for Independent Colleges and Schools (ACICS). This body certified the programs at most private sector higher education institutions. Stripping federal recognition meant that ACICS schools could no longer receive federal student aid or GI Bill funds. While many privately owned ACICS schools found alternative accreditation, others could not.
Most colleges that received certification under ACICS functioned properly and for the benefit of their students, including a number of family-owned colleges that had an exemplary track record of service to students. Unfortunately, a significant minority of them adopted unethical practices. These included large institutions with branch campuses around the country.
Founded in 1995, Corinthian College operated for nearly 20 years before losing its accreditation and shutting down. Corinthian College’s predatory and unethical practices made it the most infamous example of a college that performed a disservice to its students. Nearly 80,000 students fell victim to their fraud, which included deceptive marketing and lying to federal officials about graduation rates. Corinthian officials routinely lied to students about prospects of job placement and salaries as well.
Corinthian students in 20 states, including those who attended the institution under the names Everest and Wyotech, became eligible for loan dischargement provided they met certain conditions.
Education Corporation of America was founded in 1999 and closed in 2018. It had actually received a reprieve from the Trump Administration when its accrediting body, ACICS, received a restoration of federal recognition. Its financial woes, however, were too much to overcome.
ECA operated institutions such as Brightwood College, Brightwood Career Institute, Ecotech Institute, Golf Academy of America, and Virginia College. At its height, it served approximately 20,000 students.
While not specifically cited for malfeasance, critics claim that its programs cost too much and under delivered. ECA operated for a time without accreditation but failed to generate enough revenues to keep its doors open.
ITT Technical Institute operated since 1969 and at its height operated 130 campuses in 36 states. The Department of Education cited ITT Tech as an example of predatory recruitment.
According to federal officials and media coverage, ITT Tech would start recruiting through advertisements asking if an individual wanted a job or career. Officials criticized this technique as an example of misleading tactics. If a person answered yes and submitted contact information, they received calls from ITT Tech representatives, sometimes up to ten a day from multiple recruiters. The goal lay in securing a personal interview during which they could sell the school as a stepping stone to a lucrative career.
Like other schools, ITT Tech oversold its ability to place graduates in jobs that paid lucrative salaries. It also charged some of the highest tuition rates for a school of its type. The combination of low paying jobs and high borrowing gave ITT Tech some of the highest default rates of any institution of higher learning in the country.
Many ITT Technical Institute graduates are now eligible for student loan modification through the Department of Education.
The ITT Tech example demonstrates how colleges, universities, and other institutions of higher learning can take advantage of students through deceptive marketing and other predatory practices.
Argosy University combined three independent schools under one corporate umbrella in 2001, but its roots date back to the 1960s. It shut down completely in the spring of 2019. Like Corinthian and ITT Tech, the school served thousands of students while also using deceptive marketing practices.
After investigations by officials in Florida, Colorado, and elsewhere, Argosy University was featured in a news program spotlighting colleges’ aggressive and potentially fraudulent recruiting practices.
Students who attended Argosy University and certain institutions using the name Art Institute may be eligible for assistance. This includes the restoration of Federal Pell Grant funds, state tuition reimbursement, and federal student loan modification or discharge.
Non-Profit School Closures in 2019
While for-profit school closures have generated the most headlines, non-profit private colleges have closed in large numbers more recently. Many are located in the Northeast and have small endowments, preventing them from competing adroitly for a declining base of student numbers.
The list of non-profit schools closing their doors in 2019 includes the College of New Rochelle, Green Mountain College, Newbury College, and the College of Southern Vermont. One of the highest-profile cases of non-profit closure occurred in 2016 when Burlington College, once led by the wife of US Senator Bernie Sanders, closed down due to financial mismanagement.
Even though these non-profits failed due to poor administrative practices or economic conditions, these conditions do not negate your chances of getting a student loan modification or discharge. An effective and experienced attorney-based services firm such as Iron Fist Legal can help borrowers explore their options, learn their rights, and get results.
Borrowers May Qualify for Help Even If the School Remains Open
Students who attended schools that used such practices, even if they are still open, may be able to win a modification or even a discharge of their student loans. The Federal Trade Commission cited DeVry Institute as an example of false marketing for claiming that 90 percent of its graduates found work in their field of study within six months. De Vry also falsely claimed that graduates of their programs who held bachelors degrees had 15 percent higher incomes than those graduating from other institutions.
Student loan borrowers who attended DeVry and meet the proper criteria may be eligible for a reduction or complete discharge of their loans. In all, DeVry had to pay $100 million to satisfy the agreement with the federal government. They also had to change their marketing and recruitment strategies and tactics.
How Do I Apply for Student Loan Discharge?
You can apply for a student loan modification or discharge through the federal government or with your private lender. Remember that while you may meet the criteria for a student loan modification or complete discharge, you must continue to make your loan payments in full and on time through the application process. If you go into default, your ability to receive assistance could be restricted.
In some cases, you may not need to apply for the student loan discharge. Students who borrowed while attending certain schools or meeting specific criteria can get their loans discharged automatically. Many will hear from their lender if this is the case. Those who feel that they meet the criteria, but have not received an automatic discharge should apply.
Also, the automatic discharge may take up to three years to process. Applying immediately can help to reduce the time taken for processing. It can also save you money that you would otherwise have to use to repay the loan.
When applying for a discharge or modification based on school closure, you should start with this form. It can get the process started toward relieving you from your obligations to repay the loan as agreed.
Why Use an Attorney-Based Services Provider
Attorney-Based Services such as Iron Fist Legal can review your circumstances and see if you are eligible for loan modification or complete cancelation of your debt. We have a well defined process for helping individuals suffering from more than 30k in debt and meet the eligibility requirements. We guarantee a balance reduction of 30-70% or you pay zero in fees.
Reach out today to for a complimentary consultation from a compassionate and knowledgeable team member.