Steps to Apply for Discharge Due to School Closure or False Claims

Quick overview

If your federal school closed while you were enrolled or you believe the school made fraudulent or deceptive claims (commonly handled through Borrower Defense to Repayment), you can apply to have your federal student loans discharged. The U.S. Department of Education (Federal Student Aid) manages both processes online; each program has different eligibility rules and evidence standards.

Primary federal pages to start are the Closed School Discharge and Borrower Defense pages on StudentAid.gov (U.S. Department of Education). See:

• Closed School Discharge — https://studentaid.gov/manage-loans/forgiveness-discharge/closed-school
• Borrower Defense to Repayment — https://studentaid.gov/manage-loans/forgiveness-discharge/borrower-defense

(For clarity throughout this article I’ll use “closed school discharge” for institution closures and “borrower defense” for fraud/false claims.)

Which program likely applies to you?

• Closed school discharge: The school closed while you were enrolled or shortly after you withdrew and you couldn’t complete your program because of the closure. If you withdrew within a short window before the school’s official closure, you may be eligible. (U.S. Dept. of Education — Closed School Discharge)

• Borrower defense to repayment: You allege the school engaged in misconduct — for example, misrepresenting job-placement rates, program accreditation, transferability of credits, or the nature of training. These claims require evidence that the school’s statements or conduct violated state law or federal standards. (U.S. Dept. of Education — Borrower Defense)

If you’re not sure which fits, start with the StudentAid.gov pages above or speak with a student-loan advocate or attorney.

Step-by-step application process

1. Confirm the loan type and whether it’s federal: Closed school discharge and borrower defense are for federal student loans (Direct Loans and, in some cases, FFEL and Perkins loans). Private student loans are not eligible for these federal discharges; contact your private lender separately.

2. Don’t consolidate before applying: If you consolidate federal loans into a Direct Consolidation Loan, you may lose the ability to get a closed school discharge on the consolidated loan. Before consolidating, check eligibility and ask the Department of Education how consolidation will affect any pending claim.

3. Create or access your Federal Student Aid (FSA) account: You’ll need your FSA ID to log in to StudentAid.gov and to start an application. If you don’t have one, register at StudentAid.gov.

4. Choose the correct application and file online:

• Closed school discharge: Use the closed school discharge instructions on StudentAid.gov. The application asks for school and enrollment dates and whether you withdrew. (U.S. Dept. of Education — Closed School Discharge)
• Borrower defense: File at the Borrower Defense page; the form asks you to describe how the school misled you and to attach supporting documents. (U.S. Dept. of Education — Borrower Defense)

1. Gather and attach supporting documentation (see checklist below). The stronger and more specific your evidence, the faster adjudicators can evaluate your claim.

2. Keep records and track your application: Save copies of everything you submit. StudentAid.gov will show the claim status and any requests for more information.

3. Respond promptly to follow-up requests: The Department may ask for more documents or clarification. Respond quickly to avoid delays.

4. Review the decision and appeal if necessary: If your claim is denied or partially approved, read the decision carefully for the reason and whether you may appeal or submit additional evidence.

Documentation checklist (practical examples)

• Enrollment records and dates (transcripts, tuition bills, loan promissory notes)
• Official notice of school closure (emails, public statements, state agency notices)
• Withdrawal paperwork or last-date-of-attendance records
• Promotional materials and admissions documents (catalogs, brochures, web screenshots showing job-placement claims, accreditation statements)
• Communications with school staff (emails, chat logs, recorded calls if legal in your state)
• Employment-placement materials or contracts promising outcomes
• Contracts, signed enrollment agreements, and disclosures you received
• Statements from classmates or instructors (affidavits where helpful)

Assemble a timeline: list key dates (enrollment, tuition payments, classes attended, last attendance date, closure date, conversations, and communications).

What to expect after you apply

• Acknowledgement: You should receive confirmation that your application was received.
• Review and investigation: The Department will evaluate evidence and may contact the school (if it still exists) or state oversight agencies.
• Possible outcomes: full discharge of eligible loans, partial discharge, denial, or negotiation for partial relief. If approved, discharged loan balances are canceled and you won’t owe them.

Important administrative notes:

• If you received a closed school discharge but later decide you want credit or degree requirements completed, discuss options before accepting discharge—some borrowers choose alternatives depending on long-term education plans.
• If your loans were placed in default and collection activity occurred, some actions may be reversed if a discharge applies; expect coordination between the Department and collection agencies.

Timing and realistic expectations

Processing times vary widely based on caseload, the complexity of your claim, and whether the school is responding. Cases can move in months, but complex borrower defense claims have previously taken a year or more. File as soon as you have a reasonable claim and documentation.

Special situations to watch

• Consolidation: Consolidating before you apply can eliminate eligibility for closed school discharge on the consolidated loan. If you’ve already consolidated, ask the Department whether parts of your loan remain eligible.
• Private loans: Federal discharge programs don’t cancel private student loans. Consider negotiating with your private lender or seeking state consumer protection help.
• Loans used to pay for school-wide costs: If your loan paid for programs that were later found fraudulent, document how the loan was used and how the school’s conduct affected your decision to enroll.

Common mistakes and how to avoid them

• Waiting too long: Don’t delay gathering evidence. Records can disappear after years.
• Consolidating too early: Consolidation is irreversible for discharge purposes in most cases—get clarity before you consolidate.
• Submitting weak or generic evidence: Specificity (dates, messages, named staff and ads) matters. Broad statements like “the job-placement rate was false” need proof.
• Failing to keep copies: Always save what you submit and notes of phone calls, including names and dates.

How a typical application might look (short example)

• Applicant: Enrolled Jan 2019; school announced closure July 2020; withdrew June 15, 2020. Application: closed school discharge filed with transcript, tuition receipts, school’s closure notice, and copies of withdrawal paperwork. Result: Approved for discharge of loans that were in the student’s name and not consolidated.

• Applicant: Enrolled 2016–2018 in a technical program where the school advertised a 90% job-placement rate. Applicant could not find a job and later confirmed the school used false placement figures. Application: borrower defense filed with marketing materials, classmate statements, and employment records showing inability to obtain promised jobs. Outcome: may receive full or partial relief depending on the evidence and Department review.

After approval — what changes and follow-up steps

• Confirm account status: Your loan servicer and the Department should update accounts to show discharge.
• Check your credit reports: Discharged loans should be reported correctly. If you see errors or collection activity still listed, dispute with the credit bureaus and ask the Department for correction letters.
• Tax implications: Check current IRS guidance and consult a tax professional. (Tax laws can change; consult IRS.gov and a tax advisor.)

When to get professional help

If your claim is complex, involves large sums, or you’re unsure how to document fraud claims, consult a consumer protection attorney experienced in student-loan litigation or a reputable student-loan counselor. Free legal help may be available through state legal aid or consumer-protection agencies.

Related resources on FinHelp

• Read our eligibility guide for closed-school discharges: Closed School and Total/Partial Student Loan Discharge: Eligibility Guide — https://finhelp.io/glossary/closed-school-and-total-partial-student-loan-discharge-eligibility-guide/
• For a focused explanation of the closed school discharge, see our Closed School Discharge page — https://finhelp.io/glossary/closed-school-discharge/
• Understand how discharge differs from forgiveness: Student Loan Forgiveness vs. Discharge — https://finhelp.io/glossary/student-loan-forgiveness-vs-discharge/

Final professional tips (from practice)

• Start documenting immediately; small details (dates, names, screenshots) often decide outcomes.
• Avoid quick fixes like consolidation until you verify their effect on any pending relief.
• Use the Department’s online submission tools and save every confirmation number.

Sources and authoritative references

• U.S. Department of Education — Closed School Discharge: https://studentaid.gov/manage-loans/forgiveness-discharge/closed-school
• U.S. Department of Education — Borrower Defense to Repayment: https://studentaid.gov/manage-loans/forgiveness-discharge/borrower-defense
• Consumer Financial Protection Bureau — Student loans and borrower protections (for complaints and guidance): https://www.consumerfinance.gov/

Professional disclaimer: This article is educational and informational only and does not constitute legal, tax or financial advice. For advice tailored to your situation, consult a qualified attorney, financial advisor, or the U.S. Department of Education directly.