DCLPublicationDate: 7/1/97 DCLID: 97-L-197 AwardYear: Summary: This letter provides guidance concerning closed school loan discharges for borrowers who attended certain correspondence schools. July 1997 97-L-197 97-G-300 SUMMARY: This letter provides guidance concerning closed school loan discharges for borrowers who attended certain correspondence schools. REFERENCE: 34 CFR Section 682.402(d) Closed School Discharge Regulations Dear Colleague: Section 437(c)(1) of the Higher Education Act (HEA) of 1965, as amended, provides for the discharge of a borrower's Federal Family Education Loan (FFEL) Program loan obligation if the student was unable to complete his or her program of study because the school closed. In September 1994, guidance concerning these loan discharges was provided in Dear Colleague Letter 94-L-166/G-256. This letter provides additional guidance about closed school loan discharges for students who were unable to complete a program of study due to the closure of a correspondence school. Borrowers (or students in the case of PLUS loans) who were enrolled in a school on the date of its closure, or who withdrew from the school 90 days prior to the date of its closure, are eligible for discharge of their FFEL program loan if they meet all other applicable regulatory requirements. 34 CFR Section 682.402(d)(1)(i). The 90 day period may be extended by the Secretary if an extension is justified by exceptional circumstances related to the school's closure. Because of the complex issues surrounding certain correspondence school closures, the Secretary determined that is appropriate to extend the period during which borrowers who withdrew from the schools on the attached list prior to closure may qualify for loan discharge. American Career Training Travel/Hart Secretarial School (ACT) closed on March 29, 1990. Borrowers who enrolled*1* in ACT and took out a loan with a loan period which began on or after March 1, 1988 may be eligible for closed school discharge if they meet all other requirements in the regulations and they withdrew from the school on or after March 1, 1988. Since ACT's program of study was 12 months, the withdrawal period is extended one additional year to accommodate students who borrowed during the two years prior to closure but were unable to complete the program of study in which they were enrolled because the school failed to mail correspondence lessons, grade correspondence lessons, and/or schedule the students for residential training. The second extension of the period during which borrowers who withdrew from correspondence schools prior to closure may qualify for discharge is intended to cover former students of nine additional correspondence schools and their corresponding locations (please see the enclosed listing). Borrowers who took out a FFELP loan with a loan period which began within 12 months of the closure date of the nine schools on the attached list may be eligible for closed school discharge if they meet all other requirements in the regulations and they withdrew from the school within 12 months of the closure date. The rationale for this extension of the period prior to closure is similar to that of ACT. IMPLEMENTATION: To implement this extension of the period during which borrowers who withdrew from a correspondence school on the attached list may qualify for loan discharge, each guaranty agency/lender must review its records to identify the borrowers with a loan period which began within 12 months of the closure date of the nine additional correspondence schools on the attached list or March 1, 1988 in the case of ACT. If any of these borrowers have previously applied for discharge and been denied, their applications should be re-evaluated. If the borrowers meet all other regulatory criteria, their loans may be discharged without submission of an additional discharge application. For borrowers identified who have not previously applied, or in cases where the original discharge application is not available, guaranty agencies and lenders should mail the borrowers an application for closed school loan discharge. When making a determination of eligibility for discharge, each guaranty agency/lender will need to refer to the enclosed listing to ensure that the proper closure date is used. If a correspondence school has more than one location, the closure date used to determine eligibility for loan discharge should be the closure date of the location the borrower specifies in the discharge application. This policy will ensure that all guaranty agencies and lenders follow the same guidelines. We appreciate your assistance and cooperation as we work to implement these provisions. Sincerely, Elizabeth M. Hicks Deputy Assistant Secretary for Student Financial Aid Programs [[*1* Thus, if a student's loan period began on or after March 1, 1988, he or she would be eligible for discharge asuming he or she met all other regulaory requirements.]] Enclosure LIST OF CORRESPONDENCE SCHOOLS COVERED BY THE POLICY EXCEPTIONS* 1.) American Career Training Travel/Hart Secretarial School, Pompano Beach, FL OPE-ID: 02295900, Closure Date: 03/29/90 (Main) 2.) AMS College, Home Study Division, Alpine, CA OPE-ID: 02243100, Closure Date: 08/20/87 (Main) OPE-ID: 02243100, Closure Date: 04/30/89 (Location-Alpine, CA) 3.) Columbia School of Broadcasting, Las Vegas, NV OPE-ID: 01121900, Closure Date: 03/27/92 (Main) OPE-ID: 01121900, Closure Date: 03/22/90 (Location -Anaheim, CA) OPE-ID: 01121900, Closure Date: 12/31/90 (Location -Hollywood, CA) OPE-ID: 01121900, Closure Date: 12/31/89 (Location -Long Beach, CA) OPE-ID: 01121900, Closure Date: 03/22/90 (Location -Long Beach, CA) OPE-ID: 01121900, Closure Date: 10/15/90 (Location -Sacramento, CA) OPE-ID: 01121900, Closure Date: 01/31/89 (Location -San Diego, CA) OPE-ID: 01121900, Closure Date: 03/01/88 (Location -San Francisco, CA) OPE-ID: 01121900, Closure Date: 09/01/95 (Location -Santa Rosa, CA) OPE-ID: 01121900, Closure Date: 03/27/92 (Location -Arvado, CO) OPE-ID: 01121900, Closure Date: 05/29/92 (Location -Miami, FL) OPE-ID: 01121900, Closure Date: 10/01/91 (Location -Orlando, FL) OPE-ID: 01121900, Closure Date: 03/20/91 (Location -Atlanta, GA) OPE-ID: 01121900, Closure Date: 06/15/91 (Location -Chicago, IL) OPE-ID: 01121900, Closure Date: 06/30/91 (Location -Schaumburg, IL) OPE-ID: 01121900, Closure Date: 03/01/92 (Location -Boston, MA) OPE-ID: 01121900, Closure Date: 03/27/92 (Location -Buffalo, NY) OPE-ID: 01121900, Closure Date: 03/27/92 (Location -Pittsburgh, PA) 4.) County Schools, Bridgeport, CT OPE-ID: 02052800, Closure Date: 12/17/91 (Main) OPE-ID: 02052801, Closure Date: 12/17/91 (Additional Location-Bridgeport, CT) OPE-ID: 02052802, Closure Date: 12/17/91 (Additional Location-Bridgeport, CT) 5.) Global Academy, Atlanta, GA OPE-ID: 02589600, Closure Date: 06/08/91 (Main) 6.) National Training Systems, Laurel, MD OPE-ID: 02165800, Closure Date: 09/18/90 (Main) 7.) Northwest Schools, Portland, OR OPE-ID: 02273500, Closure Date: 06/25/91 (Main) OPE-ID: 02273501, Closure Date: 01/02/91 (Additional Location-Phoenix, AZ) OPE-ID: 02273502, Closure Date: 06/08/91 (Additional Location-Portland, OR) OPE-ID: 02273503, Closure Date: 06/08/91 (Additional Location-Portland, OR) 8.) Superior Training Services, Phoenix, AZ OPE-ID: 02128000, Closure Date: 09/12/89 (Main) OPE-ID: 02128001, Closure Date: 09/12/89 (Additional Location-Phoenix, AZ) OPE-ID: 02128002, Closure Date: 09/12/89 (Additional Location-Apache Junction, AZ) OPE-ID: 02128003, Closure Date: 02/16/90 (Additional Location-Ninevah, IN) OPE-ID: 02128004, Closure Date: 07/30/89 (Additional Location-Rialto, CA) OPE-ID: 02128005, Closure Date: 09/12/89 (Additional Location-Rockwall, TX) OPE-ID: 02128006, Closure Date: 09/12/89 (Additional Location-Houston, TX) OPE-ID: 02128007, Closure Date: 09/12/89 (Additional Location-Posen, IL) OPE-ID: 02128008, Closure Date: 09/12/89 (Additional Location-Levittown, PA) OPE-ID: 02128000, Closure Date: 09/12/89 (Location-Dallas, TX) 9.) United Schools, Clearwater, FL OPE-ID: 02295200, Closure Date: 06/08/90 (Main) OPE-ID: 02295201, Closure Date: 03/29/90 (Additional Location-Clearwater, FL) OPE-ID: 02295202, Closure Date: 01/01/90 (Additional Location-Bauxite, AR) OPE-ID: 02295203, Closure Date: 05/01/89 (Additional Location- West Chester, OH) OPE-ID: 02295204, Closure Date: 01/01/90 (Additional Location-Tampa, FL) OPE-ID: 02295205, Closure Date: 05/01/90 (Additional Location-Dallas, TX) OPE-ID: 02295206, Closure Date: 01/01/90 (Additional Location-Brooksville, FL) OPE-ID: 02295207, Closure Date: 01/12/90 (Additional Location-Monroesville, PA) OPE-ID: 02295208, Closure Date: 12/01/89 (Additional Location-Dallas, TX) 10. USA Training Academy Home Study, Newark, DE OPE-ID: 01226200, Closure Date: 12/31/91 (Main) OPE-ID: 01226201, Closure Date: 04/01/89 (Additional Location-Clarksville, TN) OPE-ID: 01226202, Closure Date: 11/17/89 (Additional Location-Pensacola, FL) OPE-ID: 01226203, Closure Date: 12/22/89 (Additional Location-Ripley, WV) OPE-ID: 01226204, Closure Date: 09/01/89 (Additional Location-Columbus, OH) OPE-ID: 01226205, Closure Date: 06/19/90 (Additional Location-Birmingham, AL) OPE-ID: 01226206, Closure Date: 12/31/91 (Additional Location-Wilmington, DE) OPE-ID: 01226207, Closure Date: 06/19/90 (Additional Location-Jackson, MS) *For more detailed information, including complete addresses, please see the U.S.Department of Education's Cumulative List of Closed Schools. |