Posted Date: December 7, 2016

Author:  Lynn B. Mahaffie, Deputy Assistant Secretary for Policy, Planning, and Innovation, Delegated the Duties of Assistant Secretary for Postsecondary Education

Subject: Important Reminders for Institutions Admitting Transfer Students Who Have Been Affected by a School Closure

In response to recent questions from institutions that are accepting transfer students who have been affected by a school closure, we are issuing this announcement to remind institutions of the eligibility requirements that apply if a student wishes to receive a closed school discharge of a Title IV loan.

Closed School Discharge: General Eligibility Requirements

Generally, a borrower may receive a discharge of a Title IV loan obtained for attendance at a school that has closed if the borrower was unable to complete his or her program of study because the school closed while the borrower was enrolled, or if the borrower withdrew from the school not more than 120 days before the school closed. However, a borrower is not eligible for a closed school discharge if he or she is completing a comparable program of study at another school:

  • Through a teach-out agreement with the school,

  • By transferring academic credits or hours earned at the closed school to another school, or

  • By any other comparable means.

Closed School Discharge: Comparable Program Guidance

With respect to what constitutes a “comparable program of study” at another school:

  • The Department is responsible for interpreting the closed school discharge statutes and regulations.

  • There is no single factor that determines program comparability.

  • A number of factors may be relevant in making a determination of comparability of a program of study, including:

    • The academic or professional nature of the two programs;

    • The similarity in course requirements;

    • The treatment of transfer credits by the institution accepting the credits (for example: as general education credits or electives, or as credits toward completion of the core program);

    • The disposition of a state approving agency or accrediting agency on the comparability of the programs.

  • Borrowers must act in good faith and to the best of their knowledge when completing discharge application forms, including when answering the question as to whether the borrower has completed or is in the process of completing a comparable program of study.

Things to Consider Related to Transfer of Credits

  • A borrower transferring into a comparable program should have an understanding from the receiving school how many credits earned at the closing school will transfer towards the receiving school’s program.

  • The receiving school should have a publicly available statement of its transfer of credit policy which includes its criteria regarding the transfer of credit and, if applicable, a list of institutions with which it has articulation agreements.

  • Borrowers should consider the number of credits that will transfer into a comparable program before choosing to transfer credits instead of applying for a closed school discharge (forgoing the discharge in order to transfer a small number of credits may not be in the borrower’s best interest.)

Completing a Comparable Program “by any other comparable means”

Factors that indicate a borrower is completing a comparable educational program “by any other comparable means” include, but are not limited to, the receiving school evaluating the borrower’s competencies through testing or interviews that translate to credit or steps toward completion of core credits for the comparable program.

Contact Information

If you have questions about this announcement, contact Brian Smith at (202) 453-7440 or by email at brian.smith@ed.gov, or Nathan Arnold at (202) 453-7874 or by email at nathan.arnold@ed.gov.

   

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