Closed School discharge
The whole balance discharged, payments refunded, and the loan removed from your credit report, where your school closed while you were enrolled or shortly after you left.
What it takes
- Enrolled at the time of closure, on an approved leave of absence at the time, or withdrawn within 180 days before it.
- For closures on or after 1 July 2023, no application at all: the discharge is automatic one year after the official closure date.
What it does not cover
- Completing the programme disqualifies you, and so does finishing it through a teach-out at another school or at another branch.
- Voluntary and forced-collection payments are refunded, and the adverse credit history is deleted.
Federally tax-free
Excluded from federal income under section 108(f)(5).
State treatment is separate and this site does not guess at it. Check your state.
This one is being litigated
Whether the pre-November-2022 closed school rules or the 180-day and one-year-automatic framework applies.
Unresolved between sources. The Department's page still describes the 180-day window and automatic discharge; the statute reverted the 2022 regulations to 2035, which on one reading restores the older rules.
The Department's published consumer-facing rule is the one to apply. If your school closed and the timing is marginal, apply anyway rather than assuming.
Sources
- Public Service Loan Forgiveness, U.S. Department of Education. Checked on . Backs the 120 qualifying payments and which plans qualify; that Tiered Standard payments do not qualify; the qualifying and non-qualifying employer categories; that the vacated employer rule has no effect.
- Teacher Loan Forgiveness, U.S. Department of Education. Checked on . Backs the $17,500 and $5,000 amounts and who each applies to; the five complete and consecutive years requirement; that the same service cannot count towards PSLF.
- Total and Permanent Disability discharge, U.S. Department of Education. Checked on . Backs the three qualification routes; the automatic discharge through quarterly data matches; the three-year monitoring period and that a VA-based discharge has none.
- Closed School discharge, U.S. Department of Education. Checked on . Backs the 180-day window and the automatic discharge one year after closure; the refund of payments and deletion of adverse credit history.
- Court actions affecting income-driven repayment, U.S. Department of Education. Checked on . Backs that the tax exclusion covered discharges from 1 January 2021 to 31 December 2025; that a milestone reached before 2026 remains covered if the discharge is processed later.
Checked on .