AG coalition calls on Department of Education to discharge loans for students who attended closed for-profit school

State Issues Department of Education Student Lending Borrower Defense State Attorney General

On November 13, a coalition of 22 state attorneys general led by the Massachusetts attorney general sent a letter to the Department of Education’s Federal Student Aid Chief Operating Officer to determine whether the Department has complied with federal regulations that allow student borrowers to qualify for automatic discharge relief if they attended a school within 120 days of its closure date and have not continued their education elsewhere. The letter referred to an estimate provided by the Department in May, which stated that approximately 52,000 former students of a now-closed for-profit college qualified for automatic closed-school discharge relief. The letter notes, however, that recent information obtained from Congress indicates that only 7,000 student borrowers have been granted automatic discharges. Among other things, the AGs ask the Department to clarify whether all eligible students are now receiving automatic discharges, and request that the 120-day window be expanded “due to the deeply compromised nature of the school and its offerings in the months before its national collapse.” In addition, the letter requests details about the number of students with discharged loans and the methodology the Department is using to implement the automatic closed-school discharge.