Title

Loan Discharge for Students of Failed Law School

March 12, 2018
 
 

The Department of Education last week announced it was extending the window for students who withdrew from a failed for-profit law school before its closure to request discharge of their federal student loan debt.

The decision means that about 300 students who attended Charlotte School of Law could be eligible to have their student loan debt cleared.

Federal regulations state that students who withdrew from a college or university not more than 120 days before its closure can apply to have their loans automatically cleared, a process known as closed-school discharge. But the secretary of education has the authority to declare exceptional circumstances to extend that window so students who withdrew earlier can be eligible for loan forgiveness.

The department in August designated April 12, 2017, as the earliest date students could have withdrawn from the law program and still receive automatic loan forgiveness. Now, Charlotte students who withdrew on or after Dec. 31, 2016, can be eligible for closed-school discharge. That date fell shortly after an announcement from the Obama administration that it would cut off the law school’s access to Title IV federal aid, a major blow to its viability as an institution.

North Carolina attorney general Josh Stein, since well before Charlotte’s closure last year, was asking Secretary Betsy DeVos to extend the closed-school discharge window and praised the decision in a statement Friday.

As of November, when the more narrow eligibility guidelines were in place, just 79 Charlotte students had applied for loan forgiveness. Kyle McEntee, the executive director and co-founder of Law School Transparency, said expanding eligibility for loan discharge was unexpected but the right decision by the department.

“This signals to other for-profit institutions that the ED will not necessarily let them wiggle out of accountability by stringing students along,” he said.

Be the first to know.
Get our free daily newsletter.

 

 
+ -

Expand commentsHide comments  —   Join the conversation!

Opinions on Inside Higher Ed

Inside Higher Ed’s Blog U

Back to Top