🎓 Discharge
Closed School Discharge and Borrower Defense: When Your School Is the Problem
Short answer: If your school closed before you finished, you may qualify for a closed school discharge of the federal loans you took out for that school. If your school misled you or broke certain laws, you may be able to apply for borrower defense to repayment. Both are free to apply for at StudentAid.gov, and decisions can take a long time.
Closed school discharge
This program can cancel eligible federal loans if your school closed while you were enrolled, or shortly after you withdrew (the window has generally been 180 days), and you did not complete your program, including through a comparable program or teach-out. If approved, the loans for that school may be discharged and some payments refunded. The Department explains the program on its forgiveness, cancellation and discharge page.
Closed school discharge is often simpler than borrower defense, and the application is usually reviewed more quickly.
Borrower defense to repayment
Borrower defense is for federal Direct Loans when a school’s misconduct affected you, such as misrepresenting job placement, costs or program quality, or violating certain state laws. Which rules apply depends on when your loan was first disbursed. You apply online at StudentAid.gov/borrower-defense, describing what happened and attaching documents. Older FFEL or Perkins loans may need to be consolidated into a Direct Loan first, which has trade-offs. See consolidation pros and cons.
Processing can be slow, and court cases and rule changes have shifted timelines over the years. Do not rely on any fixed date.
What to gather
- Enrollment and withdrawal dates, and your school’s closure date if it closed.
- Enrollment agreements, ads, emails, texts and recruiter statements.
- Records of what you paid and what you borrowed.
- A short, clear account of what you were told and what really happened.
While your application is pending
- Ask your servicer whether you can pause payments while a decision is made. Read deferment vs forbearance first, because interest and forgiveness progress can be affected.
- Watch for default. See default help.
- If you may also qualify for other cancellation, compare in forgiveness eligibility.
- Keep records and check your status in your StudentAid.gov account.
Hypothetical example: A student leaves a trade school halfway through a program when it shuts down. She applies for closed school discharge with her enrollment records. A different borrower who completed a program but was given false job placement statistics might apply for borrower defense.
Beware of fee-based help
You never need to pay to apply. Be careful with ads promising guaranteed discharges. See scam warning signs. If you have a problem with a school or servicer, you can also file a complaint. See how to file a servicer complaint.
Rules change. This guide was reviewed against official sources when it was published. Federal student-loan programs, deadlines and court-driven changes can shift quickly, so confirm current details at StudentAid.gov before you act.
Frequently asked questions
Official sources and references
Related guides
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