Informational content only. Not legal advice. Private Student Relief is a consulting organization, not a law firm. Individual results vary by lender, loan terms, school, and circumstances. Last reviewed: May 2026.
Written by Henry Silva
Private Student Loan Debt Specialist · 10+ years experience helping US borrowers whose schools closed (Corinthian, ITT Tech, Art Institutes, others) navigate federal Closed School Discharge, the FTC Holder Rule for private loans, group findings, and the FDCPA validation path when discharge claims are denied or don’t apply. Last reviewed: May 2026.
Hundreds of thousands of US borrowers attended schools that no longer exist. Corinthian Colleges (Everest, Heald, WyoTech) collapsed April 27, 2015. ITT Technical Institute closed September 6, 2016. The Art Institutes, Marinello Schools of Beauty, American Career Institute, Education Corporation of America — closure after closure swept the for-profit sector through the 2010s. If you borrowed federal student loans to attend one of these schools, the closed school discharge framework administered by the U.S. Department of Education at StudentAid.gov is direct, well-established, and often automatic for borrowers whose schools have “group findings.” If you borrowed private loans, the path runs through the Federal Trade Commission’s Holder Rule (16 C.F.R. § 433.2) — a different legal mechanism that applies specifically to private school-lender loan arrangements. These are two completely separate tracks. This guide walks US borrowers through both: which loans qualify for federal closed school discharge, how the Holder Rule applies to private loans, which schools have group findings that simplify the process, and the FDCPA validation backup when discharge isn’t available. For private borrowers, Private Student Loans Forgiveness alternatives often integrate Holder Rule claims with validation and settlement to produce the strongest combined outcomes.
Quick Answer
Federal student loans qualify for Closed School Discharge if the school closed while the student was enrolled, or if the student withdrew within 180 days before the closure (often extended for major closures like Corinthian Colleges and ITT Technical Institute). The U.S. Department of Education administers the discharge through StudentAid.gov. Several schools — including Corinthian (Everest, WyoTech, Heald), ITT Tech, Marinello Schools of Beauty, and certain Art Institute campuses — have “group findings” that can produce automatic discharge without individual applications. Private student loans do not qualify for federal Closed School Discharge — but they may qualify for relief under the FTC Holder Rule (16 C.F.R. § 433.2), a different legal mechanism that applies to private loans with a direct school-lender relationship. Federal closed school discharge and the Holder Rule are two separate tracks. The CFPB and FTC have both confirmed the Holder Rule applies to higher education financing. Where Holder Rule discharge claims are denied or don’t apply, FDCPA validation under 15 U.S.C. § 1692g provides the backup path — particularly for older private loans from closed schools that have been transferred multiple times and may have documentation gaps. A free private student relief case review identifies which combination of paths fits.
Complete federal-vs-private closed school discharge framework + school list below.
In this article
What is federal Closed School Discharge and which loans qualify?
The 180-day window, enrollment requirements, eligible federal loan types, and the application process
Which closed schools have group findings for automatic discharge?
Corinthian, ITT Tech, Marinello, Art Institute campuses — and how to check the current list
Do private student loans qualify for closed school discharge under the FTC Holder Rule?
16 C.F.R. § 433.2, the school-lender relationship requirement, and the difference from federal closed school discharge
What if my school closed but discharge claims are denied — what’s the backup path?
FDCPA validation, settlement, CFPB complaints, and the Durbin-Warren congressional pressure framework
Frequently asked questions about closed school discharge for private loans
Real questions about Holder Rule timelines, refunds, tax treatment, and combining federal and private claims
What Is Federal Closed School Discharge and Which Loans Qualify?
Federal Closed School Discharge is a U.S. Department of Education program that cancels federal student loans when a borrower’s school closes while they are enrolled or shortly after they withdrew. The discharge is administered through the federal student aid system, and qualifying borrowers can receive 100% cancellation of eligible federal loans plus, in some cases, refunds of payments already made. The program is well-established and operates through the official portal at StudentAid.gov.
The 180-day window — often extended. Standard federal Closed School Discharge requires the borrower to have been enrolled when the school closed or to have withdrawn within 180 days before the closure date. For the largest school closures, the U.S. Department of Education has often extended this window. For Corinthian Colleges (which closed April 27, 2015), eligible borrowers include students attending Everest, WyoTech, or Heald schools when they closed, or students who withdrew after June 20, 2014 — meaning the window was extended substantially beyond 180 days. For ITT Technical Institute (which closed September 6, 2016), eligibility extends to students who withdrew on or after May 6, 2016. The current closed school list and specific date windows are published on StudentAid.gov and updated as schools close or qualifying windows are extended.
Eligible federal loan types. Federal Closed School Discharge applies to federal education loans, including Direct Loans (Subsidized, Unsubsidized, PLUS), FFEL Program Loans, and Federal Perkins Loans made in 1986 or a later year. Both FFEL program loans and Direct Loans qualify. This includes Federal Parent PLUS loans borrowed by a parent on behalf of a dependent undergraduate student to pay for the student’s college education. Private student loans are not eligible for federal Closed School Discharge — they run on a separate track through the FTC Holder Rule (covered in section 3).
The “unable to complete elsewhere” requirement. A key requirement for federal Closed School Discharge is that the borrower must have been unable to complete the program in which they were enrolled due to the school closure — meaning they did not transfer to another school and complete the same program. If a borrower transfers and completes the program at a teach-out institution or comparable school, they are generally not eligible for closed school discharge. If they were on an approved leave of absence at the time of closure, they are treated as though they were still enrolled. The U.S. Department of Education’s official guidance at StudentAid.gov provides current detail on this requirement.
Heightened Cash Monitoring as a warning sign. The U.S. Department of Education places schools on Heightened Cash Monitoring (HCM) when there are concerns about financial responsibility, regulatory compliance, or operational stability. HCM is a public designation and frequently precedes school closure. Schools that were placed on Heightened Cash Monitoring before their closure include Corinthian Colleges, ITT Technical Institute, American Career Institute, and Education Corporation of America. Current borrowers and recent graduates of HCM schools may want to monitor their school’s status, since HCM can signal increased closure risk and timing of withdrawal may matter for discharge eligibility.
Which Closed Schools Have Group Findings for Automatic Discharge?
The U.S. Department of Education has issued “group findings” for certain schools based on documented misconduct or closure patterns. Group findings can produce automatic discharge of federal loans without requiring individual applications — meaning eligible borrowers should see their loans discharged through their loan servicer without filing a separate Loan Discharge Application. Schools with group findings represent the largest waves of for-profit closures of the past decade and a substantial share of all closed school discharge cases.
How automatic discharge works. When the U.S. Department of Education issues a group finding for a school, qualifying federal loans of borrowers from that school are processed for automatic discharge through the loan servicer, without the borrower needing to submit an individual application. In practice, this means borrowers should see their federal loans removed from billing and reported to credit bureaus as discharged. The discharge can take time to process — sometimes months — and borrowers should monitor their accounts and credit reports. If your school is on a group finding list and you have not received automatic discharge, contact your loan servicer and StudentAid.gov to confirm processing status.
Borrower Defense to Repayment as a separate track. For federal loans, borrowers can pursue Borrower Defense to Repayment (BDTR) under 34 C.F.R. § 685.222 if their school engaged in misconduct, regardless of whether the school is currently operating. BDTR is administered by the U.S. Department of Education through StudentAid.gov and is separate from Closed School Discharge. The two programs sometimes overlap (a closed school may also have BDTR findings) and sometimes don’t (a currently operating school can have BDTR claims). BDTR can result in full discharge plus refunds. The investigation may take longer because the school has an opportunity to respond. The official source is StudentAid.gov/borrower-defense.
The current list changes — verify directly. Schools continue to close, and the U.S. Department of Education updates the closed school list and group findings regularly. Before making decisions about discharge claims, verify your school’s current status at StudentAid.gov. The site maintains a current list of closed schools, the relevant closure dates, eligibility windows, and group finding status. If your school is not currently on the list but has closed, contact StudentAid.gov for guidance on individual applications.
School closed + private loans? Different track. Real options.
Federal closed school discharge doesn’t cover private loans. Henry Silva and the team at Private Student Relief use FTC Holder Rule + FDCPA validation as Private Student Loans Forgiveness alternatives — cutting private balances up to 50%.
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Do Private Student Loans Qualify for Closed School Discharge Under the FTC Holder Rule?
Private student loans do not qualify for federal Closed School Discharge — but they may qualify for relief under the Federal Trade Commission’s Holder Rule. The Holder Rule, codified at 16 C.F.R. § 433.2, is a separate legal mechanism that applies specifically to private loans with a direct school-lender relationship. The FTC has explicitly stated that the Holder Rule applies to higher education financing — including vocational training. Federal Closed School Discharge and the Holder Rule are two completely separate tracks; understanding which applies to which loan matters.
The school-lender relationship requirement. The Holder Rule preserves the borrower’s right to raise against the loan holder any defenses the borrower could have raised against the seller of the good or service — in education, the school. For the Holder Rule to apply, the loan contract must contain the FTC’s required Holder Rule notice, and the loan must have been made in connection with a direct school-lender arrangement. In practice, this most often applies to direct-to-school private loans where the loan funds went from the lender directly to the school to pay tuition. Federal student loans do not trigger the Holder Rule because the federal government is the lender and ownership does not change hands in the same way.
The CFPB Education Loan Ombudsman has documented the issue. The Consumer Financial Protection Bureau’s 2022 Report of the Education Loan Ombudsman addressed the gap between federal Borrower Defense relief and private loan discharge at length — noting cases where borrowers received federal Borrower Defense relief but were then denied parallel discharge on their private loans, despite the loans being subject to Holder Rule claims. The 2023 Annual Report continued the analysis. This is the regulatory record establishing that the Holder Rule applies to higher education financing — and that private loan holders’ refusal to honor those claims has been a documented pattern.
The Navient discharge program addresses some Holder Rule cases. Navient’s School Misconduct Discharge Application, launched in 2024, is one major lender’s attempt to address Holder Rule claims for the predatory for-profit loans in its portfolio. The Navient program is covered in detail in our companion guide on Navient’s School Misconduct Discharge. Importantly, the Navient program operates at the lender’s discretion and has been documented by congressional investigators (Senators Warren and Durbin, Representative Dean) as denying roughly 80% of applicants. Holder Rule claims are not exclusive to Navient — they apply to any private loan with the school-lender relationship and the required notice — but Navient’s portfolio is among the largest of legacy for-profit private student loans.
Remedies under the Holder Rule. A successful Holder Rule claim can result in cancellation of the remaining loan balance and, depending on circumstances, refund of payments already made (capped at the amount the borrower paid). Unlike administrative federal Closed School Discharge — which is a benefit administered by the Department of Education — Holder Rule relief is typically asserted as a legal claim or defense against the loan holder. Borrowers can pursue Holder Rule claims through direct negotiation with the lender, formal complaint processes, or in some cases litigation with the assistance of a consumer-protection attorney.
What If My School Closed but Discharge Claims Are Denied — What’s the Backup Path?
When discharge claims are denied — whether under the federal Closed School Discharge process, the FTC Holder Rule, or a specific lender’s program like Navient’s School Misconduct Discharge — relief options remain. The backup path runs through FDCPA validation under 15 U.S.C. § 1692g, hardship settlement, CFPB complaints, and the ongoing congressional pressure documented by Senators Warren, Durbin, and Representative Dean. Each of these operates under federal statute rather than lender discretion, which is precisely why they provide reliable backup when discretionary discharge programs fail.
FDCPA validation for older transferred private loans. Private loans tied to closed schools are often decades old, have been transferred between lenders, debt buyers, and collectors multiple times, and frequently have documentation gaps. When the loan is currently with a third-party collector, the FDCPA gives the borrower the federal right to demand validation: the original signed promissory note, complete payment history, and chain-of-ownership documentation. Many older private loans from closed for-profit schools cannot satisfy validation requirements. When validation fails, the practical result can be settlement at 30-50% of the balance, full removal of negative credit reporting, or in some cases practical unenforceability of the debt.
Hardship settlement strengthened by closure documentation. Documentation of the school closure — whether the school is on the federal closed school list, has group findings, has been the subject of CFPB or FTC enforcement, or is documented in congressional letters — strengthens hardship settlement positioning. The fact that a borrower attended a school that was later determined to have engaged in misconduct, was closed under regulatory action, or has been the subject of group findings is meaningful context for settlement negotiations. Settlement of private loans tied to closed schools typically resolves balances at 30-50% with this documentation supporting stronger positioning.
The Durbin-Warren-Dean congressional pressure framework. Beginning in 2024 and continuing through 2025, Senators Dick Durbin and Elizabeth Warren and Representative Madeleine Dean led repeated congressional letters pressing Navient and other private loan holders to honor Holder Rule claims and discharge predatory loans tied to closed for-profit schools. The April 2024 Durbin-Warren letter — joined by 7 Senate colleagues — specifically called on Navient to cancel decades-old, predatory student loans before the planned MOHELA transfer. The December 2024 Warren-Dean bicameral letter joined 24 lawmakers and warned the CFPB and FTC that Navient may be improperly denying thousands of borrowers. This sustained congressional pressure creates the political and regulatory context in which CFPB complaints carry more weight and individual borrower documentation becomes part of broader enforcement records.
CFPB complaint. The Consumer Financial Protection Bureau (CFPB.gov) accepts and publishes consumer complaints about private student loan servicers, collectors, and lenders. Given the documented CFPB Education Loan Ombudsman concern about private loan discharge denials, complaints about closed-school cases inform ongoing regulatory priorities and typically generate responses from companies within 15 days. Filing a CFPB complaint creates a public record that supports both your individual case and the broader enforcement environment.
Combining tracks. The strongest approach often combines tracks rather than choosing one. A borrower with federal loans from Corinthian, Heald, or ITT Tech should pursue federal closed school discharge or automatic group finding processing for the federal loans. For the same borrower’s private loans, the parallel path runs through FTC Holder Rule claims, FDCPA validation when in collections, and hardship settlement when discharge claims are denied. Both tracks can run in parallel; they address different loan types and different legal frameworks. This combined approach is the foundation of Private Student Loans Forgiveness alternatives for closed-school borrowers.
Closed School Discharge for Private Loans: Key Facts
Federal Closed School Discharge is a U.S. Department of Education program that cancels federal student loans when the borrower’s school closed while they were enrolled or shortly after withdrawal. The standard window is 180 days before closure but has been extended for major closures including Corinthian Colleges (closed April 27, 2015 — eligibility for withdrawals after June 20, 2014) and ITT Technical Institute (closed September 6, 2016 — eligibility for withdrawals on or after May 6, 2016). The program is administered through StudentAid.gov and applies to Federal Direct, FFEL Program, and Perkins Loans (1986+), including Parent PLUS. Borrowers must have been unable to complete the program elsewhere. Schools with “group findings” — Corinthian (Everest, WyoTech, Heald), ITT Tech, Marinello Schools of Beauty, certain Art Institute campuses — can produce automatic discharge without individual applications. Borrower Defense to Repayment under 34 C.F.R. § 685.222 is a separate federal program for school misconduct that does not require school closure.
Private student loans do not qualify for federal Closed School Discharge but may qualify for relief under the FTC Holder Rule (16 C.F.R. § 433.2) — a completely separate legal track. The Holder Rule applies to private loans with a direct school-lender relationship — most commonly direct-to-school loans where funds went from the lender directly to the school. The FTC has explicitly stated the Holder Rule applies to higher education financing including vocational training. The CFPB Education Loan Ombudsman Report 2022 documented at length the gap between federal Borrower Defense relief and private loan discharge, with cases of borrowers receiving federal relief but being denied parallel private loan discharge despite Holder Rule applicability. Successful Holder Rule claims can result in cancellation of the remaining balance and refund capped at amount paid. Navient’s School Misconduct Discharge Application launched 2024 addresses some Holder Rule cases for its portfolio but denies ~80% of applicants per congressional investigations.
When discharge claims are denied — federal or private — backup paths run through FDCPA validation under 15 U.S.C. § 1692g, hardship settlement strengthened by closure documentation, and CFPB complaints. Private loans tied to closed schools are often decades old, transferred multiple times, and frequently have documentation gaps that cannot satisfy validation requirements; the practical result can be settlement at 30-50% of balance, removal of negative credit reporting, or practical unenforceability. Sustained congressional pressure from Senators Durbin and Warren and Representative Dean — including the April 2024 Durbin-Warren letter to Navient and the December 2024 Warren-Dean bicameral letter joining 24 lawmakers — has documented the discharge denial patterns and supports CFPB regulatory attention. The strongest approach often combines tracks: federal closed school discharge or automatic group findings for federal loans, parallel FTC Holder Rule claims for private loans, with FDCPA validation and settlement as backup. A free case review identifies which combination fits.
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Frequently Asked Questions About Closed School Discharge
My school closed but I had both federal and private loans. Does the same discharge process apply to both?
No — they run on two separate tracks. Federal loans are eligible for federal Closed School Discharge administered through StudentAid.gov; if your school has a group finding (Corinthian, ITT Tech, Marinello, certain Art Institute campuses), discharge may be automatic. Private loans are not eligible for federal Closed School Discharge but may qualify for relief under the FTC Holder Rule (16 C.F.R. § 433.2) if your loan had a direct school-lender relationship and contains the Holder Rule notice. You can — and often should — pursue both tracks in parallel. They address different loan types under different legal frameworks. A free case review identifies which path applies to which of your loans.
How do I know if my school has a “group finding” for automatic federal discharge?
Check StudentAid.gov for the current list of closed schools with group findings. Schools with documented group findings as of last review include Corinthian Colleges (Everest, WyoTech, Heald — closure date April 27, 2015), ITT Technical Institute (September 6, 2016), Marinello Schools of Beauty (February 4, 2016), and certain Art Institute campuses. If your school is on the group findings list, your federal loans should be processed for automatic discharge by your loan servicer without requiring an individual application. If you believe your school qualifies but you have not received automatic discharge, contact your loan servicer and StudentAid.gov to confirm processing status. The list is updated periodically as new closures occur or new findings are issued.
I withdrew from my school more than 180 days before it closed. Am I still eligible for federal Closed School Discharge?
Possibly. While the standard federal Closed School Discharge window is 180 days before closure, the U.S. Department of Education has extended this window for major closures. Corinthian Colleges (closure April 27, 2015) eligibility extends to students who withdrew after June 20, 2014 — well beyond 180 days. ITT Technical Institute (closure September 6, 2016) eligibility extends to students who withdrew on or after May 6, 2016. Check the specific eligibility window for your school at StudentAid.gov. If the standard window doesn’t cover your situation but the school had documented misconduct, Borrower Defense to Repayment under 34 C.F.R. § 685.222 may apply regardless of withdrawal timing.
How do I bring a Holder Rule claim against my private loan holder?
A Holder Rule claim is typically asserted as a legal claim or defense against the loan holder, not an administrative discharge application. The general approach: first, locate your original loan agreement and verify it contains the FTC Holder Rule notice (the language preserving claims and defenses against the seller); second, document the school’s misconduct or breach (closure under regulatory action, group findings, fraud, misrepresentation, accreditation problems); third, send a written demand to the current loan holder asserting Holder Rule claims and requesting cancellation; fourth, file a CFPB complaint and consider consulting a consumer-protection attorney experienced in Holder Rule litigation. For Navient-held loans, the specific Navient School Misconduct Discharge Application is one path, though it denies approximately 80% of applicants per congressional investigations.
Is closed school discharge tax-free?
It depends on the type of discharge and the year. The American Rescue Plan Act of 2021 made most federal student loan discharges tax-free at the federal level through December 31, 2025. After December 31, 2025, the temporary exclusion expired for most discharge types. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, made death and disability discharge permanently tax-free at the federal level — but closed school discharge and other discharge types may be subject to general Cancellation of Debt income (CODI) rules for discharges in 2026 and beyond unless another exclusion applies. State tax treatment varies by state. Consult a tax professional for case-specific guidance, particularly for large discharge amounts that could affect overall tax liability.
My school closed but I completed my program at a teach-out school. Am I still eligible?
Generally no for federal Closed School Discharge. A key requirement is that the borrower must have been unable to complete the program in which they were enrolled due to the school closure. If you transferred to a teach-out institution or comparable school and completed the program, you typically are not eligible for federal closed school discharge — the rationale is that you ultimately received the educational benefit you originally sought. However, Borrower Defense to Repayment may still apply if the original school engaged in misconduct (misrepresentation of job placement, false accreditation, fraud), regardless of whether you completed the program elsewhere. The two programs have different eligibility frameworks. For private loans, Holder Rule claims based on school misconduct may apply even when federal closed school discharge does not.
If my closed-school discharge is denied or doesn’t apply, what should I do?
The backup paths are FDCPA validation under 15 U.S.C. § 1692g (when the loan is in collections — particularly powerful for older private loans from closed schools with documentation gaps), hardship settlement strengthened by school closure and misconduct documentation, CFPB complaints (which carry weight given documented CFPB Education Loan Ombudsman concern about private loan discharge denials), and consumer-attorney litigation for direct Holder Rule claims. Each backup operates under federal statute rather than discretionary lender review, which is why they provide reliable backup when discretionary discharge programs fail. A free case review identifies which combination fits your specific situation — without upfront fees and without obligation.
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Henry Silva and the team at Private Student Relief map federal closed school discharge, FTC Holder Rule claims, and FDCPA validation backups as part of Private Student Loans Forgiveness alternatives — cutting private balances up to 50%.
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About the Author: Henry Silva
Private Student Loan Debt Specialist with 10+ years of experience helping US borrowers whose schools closed — including Corinthian (Everest, WyoTech, Heald), ITT Technical Institute, Marinello Schools of Beauty, Art Institutes, American Career Institute, and Education Corporation of America — navigate federal Closed School Discharge, the FTC Holder Rule for private loans, group findings, and the FDCPA validation backup when discharge claims are denied. Coordinates with consumer protection attorneys and vetted partner providers on FDCPA-compliant private loan relief across 48 states.
Federal Closed School Discharge is one of the clearest, most generous programs in the federal student loan system — and for federal borrowers from Corinthian, ITT Tech, Marinello, and other group-finding schools, it can work automatically. Private loans run on a different track entirely. The FTC Holder Rule provides the legal framework, but private loan holders have documented patterns of denying claims, and FDCPA validation plus settlement is often the most reliable backup. A free case review identifies which combination of tracks fits your specific situation.
Disclaimer: Informational content only. Not legal, tax, or financial advice. Henry Silva is a debt specialist, not a licensed attorney, tax professional, or financial advisor. Private Student Relief is owned and operated by Joco and is a private student loan payment relief consulting organization — not a law firm, debt settlement company, debt consolidation company, loan provider, or U.S. Department of Education representative. We do not assume consumer debt, make payments to creditors on your behalf, or process federal discharge applications. We help clients reduce their private student loan payments by matching them with a vetted partner provider that performs FDCPA-compliant debt validation, hardship negotiation, or consolidation strategies under independent business credentials. Ratings, BBB accreditation, and industry tenure referenced belong to our partner provider. Individual results vary based on financial circumstances. Not available in South Carolina or Mississippi. Federal Closed School Discharge program rules, eligibility windows, school lists, group findings, application processes, and tax treatment are governed by federal law administered by the U.S. Department of Education; verify current requirements at StudentAid.gov. FTC Holder Rule application (16 C.F.R. § 433.2), Borrower Defense to Repayment under 34 C.F.R. § 685.222, and related regulations are summarized for educational purposes; consult a licensed consumer protection attorney for case-specific advice on Holder Rule claims. School closure dates, eligibility windows, and group findings cited (Corinthian Colleges April 27, 2015; ITT Technical Institute September 6, 2016; Marinello Schools of Beauty February 4, 2016) reflect publicly available information at last review and may have been updated. The American Rescue Plan Act tax-free treatment expired December 31, 2025; OBBBA made death and disability discharge permanently tax-free but other discharge types may be subject to general Cancellation of Debt income rules in 2026 and beyond unless another exclusion applies. Senate letters from Senators Durbin and Warren and bicameral letters from Senator Warren and Representative Dean cited reflect publicly available statements. Last reviewed: May 2026.