Effect of Corinthian Colleges’ Closure on Student Financial Aid: Frequently Asked Questions Page: 6 of 10
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Effect of Corinthian Colleges' Closure on Student Financial Aid
Federal Student Loans
For HEA Title IV federal student loans (i.e., loans made under the Direct Loan (DL), Federal
Family Education Loan (FFEL), and Perkins Loan programs) different procedures for borrowers
to receive debt relief may apply depending on whether a borrower's loan would be discharged on
the basis of a school closure or on the basis of the borrowers asserting a defense against
Closed School Loan Discharge
Students who attended a CCI school that closed may be eligible to have the full balance of their
outstanding HEA Title IV loans discharged. In general, borrowers of Title IV loans may be
eligible to have the full balance of their outstanding HEA Title IV loans discharged if they, or the
student on whose behalf a parent borrowed in the case of Parent PLUS Loans, are unable to
complete the program in which they enrolled due to the closure of the school.'0 Borrowers who
have their loans discharged due to a school closure are also eligible to be reimbursed for any
amounts previously paid on those loans, and if any adverse credit history was associated with the
loan (e.g., default), the loan discharge will be reported to credit bureaus so that they may delete
the adverse credit history associated with the loan."
Typically, to be eligible for loan discharge due to school closure, the student must have stopped
attending the school within 120 days of the school's closing date and the student must also have
been unable to complete the program of study at either the closed school or a comparable
educational program at another school, either through a teach-out or by transferring credits to
another school.'2 If the closing school offers the option for students to complete their education
through a teach-out at another school, a student may refuse the option and would still qualify for
loan discharge. If a student refuses the teach-out, later enrolls at another school in a program
substantially similar to the one in which he or she had been enrolled, receives credit for work
completed at the closed school, and completes the new program, then the student may not qualify
for closed school discharge."
On June 8, 2015, ED announced that borrowers who were attending the CCI schools that closed
in April 2015, and those students who withdrew within 120 days of those schools closing, would
be immediately eligible for closed school discharge of their Title IV student loans, so long as they
1 HEA 437(c)(1); HEA 455(a)(1); HEA 464(g).
" 34 C.F.R. 685.214(a)(4).
12 Guidance provided by ED to former CCI students indicates that if a student enrolled in a comparable educational
program at a new school, completed it, and received credits for the classes taken at the closed school, then the student is
ineligible for loan discharge; but, if the student enrolled in and completed a comparable program of study at a new
school and the new school did not give them credit for any coursework completed at the closed school, then the student
would be eligible for loan discharge. U.S. Department of Education, Federal Student Aid, "Frequently Asked Questions
About Corinthian Colleges," Question 9, https://studentaid.ed.gov/sa/about/announcements/corinthian/faq#loan-
discharge, accessed May 28, 2015. Alternatively, if a student transferred credits to a new school but completed a
completely different program of study at the new school, then the student is eligible for loan discharge, as the program
at the new school is entirely different than the one for which the loans were intended at the previous school. U.S.
Department of Education, Federal Student Aid, "Q&A on Closed School Discharge," https://studentaid.ed.gov/sa/
repay-loans/forgiveness-cancellation/closed-school#q-and-a, accessed June 3, 2015.
13 U.S. Department of Education, Federal Student Aid, "Frequently Asked Questions About Corinthian Colleges,"
https://studentaid.ed.gov/sa/about/announcements/corinthian/faq, accessed June 9, 2015.
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Effect of Corinthian Colleges’ Closure on Student Financial Aid: Frequently Asked Questions, report, June 17, 2015; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc821006/m1/6/: accessed December 12, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.