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If Your School Closes

What do I do if my school stops providing education services?

Colleges and universities provide a commodity (an education) to students. Students pay for that commodity with either their or their family’s resources or through financial aid. Unfortunately, schools, like other businesses, sometimes do not have the resources to continue providing their commodity and must close. This can be very frustrating for students, who then must find a way to

The following information may be useful if you find out that your school is closed or closing.

Where do I start?

First, get the facts. If the school closes while you are attending, you will need to act fast. You should first meet with the financial aid administrator to find out what your remaining financial aid obligations are, and also meet with your academic advisor to find out what your remaining academic obligations are.

Academic obligations:

Financial aid obligations

What if my school is already closed?

If the school has already closed, you will face an entirely different set of circumstances. You will need to locate and obtain both your academic and financial aid records. When a school closes, its academic and financial aid records are sent to a state licensing agency. These agencies either store the records or make arrangements to have them stored. For a complete statewide listing of these agencies, click here.

OK. Now I’ve found my records. Where do I go from here?

The above state agency link also can provide you with information on how you can get your education back on track. First, they can tell you about any state tuition recovery programs that are available to closed school victims. They can also tell you how you can continue your education through a teach-out or a transfer program.

In a teach-out, another school offers you a chance to complete a similar or identical program of study for which you should not incur additional costs other than those you would have paid had you been able to complete your original program of study. In a teach-out, you will typically receive a certificate or degree from the original (or closed) school, even if another school teaches the classes. If you participate in a teach-out program, make sure to talk to the academic advisor at your new school to discuss how you will get your certificate or degree.

In a transfer, you use the academic credits or clock hours that you earned at the school that closed toward the completion of your program of study at a new school. You should note, however, that when you transfer, you may incur additional costs to cover any additional charges necessary to pay for the credits or clock hours that are needed to complete your program of study. That is, in a transfer situation, you become a student of the new school and will receive the certification or degree from the new school. As a result, you may need to take additional classes required for the program, or to meet residency requirements, and you will have to pay for all additional classes or credits at the new school’s tuition rates.

If I received any financial aid at the closed school, will that affect what I will receive at another school?

Think of it this way. Let’s say you are eligible for a Pell Grant. If you attended school A in the fall and received one-half of your Pell Grant for the year and transferred to school B in the spring, you would be eligible for the second half of the Pell award. If school A closed before you completed the fall term, and you then transferred to school B, you would need to determine whether you received the Pell amount for which you were eligible and then determine what you would be eligible for in the spring. Similarly, if you received other types of aid in the fall that would affect what aid you could receive in the spring. Regardless of whether you’ve transferred to a new school or are taking advantage of a teach-out, you will need to provide the financial aid office at your new school with your financial aid records so that the new school can determine your eligibility and award your new aid accordingly.

You can find out how much federal student aid you received by visiting www.nslds.ed.gov. To access your information, you will need your Federal Student Aid PIN. If you need more information about the PIN, visit the website at www.pin.ed.gov.

What happens if I have outstanding loan debt when my school closes?

If you’ve taken out student loans, you need to make sure that they don’t go into repayment (and possibly into default) during any lapse of time between attendance at one school and another. If you have questions about your loan status, contact the holder of your loan(s) to find out what you need to do to keep the loan current. For example, you might need to begin making payments, or you could defer payment if you qualify. If you don’t know what agency holds your loan, you can look up your records at www.nslds.ed.gov.

Can my loans be discharged or canceled if my school closes before I can finish my program of study?

Yes, if you were enrolled when the school closed, and you couldn’t complete your program of study because of the closure, you may be able to have your student loan debt discharged (canceled). If you were on an approved leave of absence, you are considered to have been enrolled at the school. If your school closed within 90 days after you withdrew, you are also considered eligible for the discharge. However, your loan cannot be canceled because of personal circumstances that caused you to withdraw more than 90 days before the school closed. For more information and for a list of closed school contacts, click here.

Please bear in mind that you are not eligible for loan cancellation if you are completing a comparable educational program at another school. If you complete a comparable program of study at another school after your loan is canceled, you may have to pay back the amount that was canceled. If you haven't received a diploma or certificate but have completed all of the coursework for the program, you're not eligible for the discharge.

How can I get more detailed information on loan discharge (cancellation) procedures?

To get additional information on the types of loan discharges (cancellations) available and how to apply for a discharge (cancellation), go to the Discharge/Cancellation page.

Last updated/reviewed April 29, 2011