UNITED STATES DEPARTMENT OF EDUCATION

OFFICE OF POSTSECONDARY EDUCATION

Clarifying the Session 1 Proposal on Automatic Closed School Discharges

Updated October 5, 2021

Borrowers who did not enroll elsewhere

Our proposal is more generous at every point in time than existing regulations for borrowers whose

institutions closed and who did not enroll elsewhere. They will wait less time to get relief than they do

today.

School Closure

Date Existing regulations Proposed regulations

Prior to November

1, 2013

Must submit an application. No

automatic discharge.

Automatic discharge if they did not re-enroll

within one year.

November 1, 2013

to June 30, 2020

Automatic discharge if they did

not enroll within 3 years.

Automatic discharge if they did not re-enroll

within one year.

July 1, 2020

onward

No automatic discharge. Automatic discharge if they did not re-enroll

within one year.

Borrowers who did enroll elsewhere

Our proposal is more generous than existing regulations at every point in time. In particular, the

standards as data improve allow borrowers more opportunities to get an automatic discharge even if

they re-enroll.

The Department thinks it is important to care about re-enrollment. The idea behind a closed school

discharge is to provide relief for a borrower who is unable to complete their studies and thus benefit

from the loans they took out. As we get better data, we are able to define this more broadly and give

more borrowers the opportunity to still re-enroll and get relief.

School Closure

Date Why this date? Existing regulations Proposed regulations
Closed School Discharge Clarification -2

Prior to

November 1,

2013

Before 2016 rule

applies to school

closures. ED data

are limited and can

only show if a

borrower reenrolled.

Must submit an

application.

Automatic discharge if they did

not enroll within one year.

Otherwise submit an

application.

November 1,

2013 to June 30,

2014

When 2016 rule

starts, ED data are

still limited to

showing only if the

borrower reenrolled.

Must submit an

application.

Automatic discharge if they did

not enroll within one year.

Otherwise submit an

application.

July 1, 2014 to

June 30, 2019

ED data improves to

capture programlevel re-enrollment

so that ED can

identify if a

borrower enrolled in

a comparable

program.

Must submit an

application.

Automatic discharge if they did

not enroll within one year.

Automatic discharge for any reenrollment that isn’t the same

4-digit CIP and level program.

Otherwise, submit an

application.

July 1, 2019

onward

ED data improves to

capture if a

borrower takes an

approved teach-out

and whether they

completed that

teach-out.

Must submit an

application

Automatic discharge if they did

not enroll within one year.

Automatic discharge for any reenrollment in which the

borrower does not complete an

accreditor approved teach out

plan.
Closed School Discharge Clarification -3

Otherwise submit an

application.

Clarifying attestation

The Department also wants to clarify the point on attestation about not having enrolled in a comparable

program. This is for borrowers who are not eligible for the automatic discharge—borrowers who reenrolled within 1 year or, for later periods only, those who enrolled in a comparable program by CIP and

level or took and completed an accreditor-approved teach out. We are proposing that they submit an

application, just as borrowers today do.

All the items discussed are captured as check boxes on the current application for closed school

discharge, which is then signed by the borrower. The Department’s proposal doesn’t add any new

requirements; but it does decrease the number of borrowers who might have to submit an application,

capturing more borrowers in the automatic discharges. You can see a PDF version of the application

here, although borrowers can also submit it electronically:

https://studentaid.gov/sites/default/files/closed-school-loan-discharge-form.pdf.

Question 13 asks a borrower to check one of the following:

Those who say they did enroll in a program then have one or two additional questions to answer. You

will note we are proposing to change the test in the first box under Question 15 to accepting most

credits, as opposed to any credits. This will make more students eligible for a discharge.
Closed School Discharge Clarification -4