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(97-L-197) (97-L-197) This letter provides guidance concerning closed school loan discharges for borrowers who attended certain correspondence schools.

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.

Last Modified: 06/30/1997