Ask The Get Out of Debt Experts Closed School Discharge

My College Closed After I Got My Degree and I Want to Get Rid of My Student Loan Debt – Aaron

Written by Steve Rhode


Dear Steve,

I attended Collins College in Phoenix Arizona in the early 2010s. I took out a number of federal and private student loans to pay for the schooling, in the amount of ~$80k total.

I did complete the courses and received a degree; however, Collins College never received its accreditation and closed within a couple of years after I graduated. Collins was successfully sued at one point for misrepresenting its post-graduation job placement services, but unfortunately I did not know about this until after it was closed.

At this point I have what is most likely a worthless degree (I’m not even certain if I can get my transcripts; I understand that many of the school’s students can’t) and a huge chunk of my monthly income going out to pay off student loans, but only the minimums. That’s $230 a month going to the private loans and another $350 going to federal (between Navient and Mohela).

I know that I’m most likely stuck with my federal student loans; I don’t qualify for any of the current loan forgiveness programs. However, even getting rid of the private loans would help, especially since they don’t want to negotiate payments or interest rates.

I recently purchased a home with my fiance and with the costs of home ownership, even freeing up the money going toward the admittedly-lower private loan payments would be a boon.

What are my best options for alleviating the financial strain from my loans? Do I have any legal recourse to get them excused because of the circumstances of the school closure?



Dear Aaron,

Well it sounds as if Collins College met the federal Title IV accreditation standard or they would not have been eligible for federal loans.

When it comes to federal student loans and being able to discharge the debt because the school closed, there are very specific rules that must be followed. But the biggest issue here is you did graduate and received the degree. That would eliminate your ability to get a closed school discharge.

Now with the federal student loans you may still be able to pursue a Borrower Defense to Repayment claim. The most critical part of this claim process for forgiveness is to demonstrate how the school broke state laws and why you should be entitled to loan forgiveness. If you decide to pursue this path to have your federal loans forgiven, there are issues that can make your loan situation worse if you are not aware of them.

A closed school discharge is not available for private student loans. You would either need to negotiate a mutually agreed repayment plan with the private student loans or take a riskier path and attempt to force the hand of the private lenders. You should read Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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