For many people facing bankruptcy in Tennessee, student loans are a major source of debt. However, student loan debt is dischargeable only in very limited circumstances. Often times, students are left with the burden of paying back loans for the education that was supposed to help them get ahead.
Approximately 35,000 students must decide what to do next after all 137 campuses of ITT Technical Institute abruptly closed their doors this week, reports The Washington Post. One of the options that students have is to apply for loan forgiveness. The students will have to show that in the past 120 days, they either had withdrawn from the school or were enrolled, in order to be considered eligible. The option is referred to as the “closed-school discharge.”
The closure of the for-profit school follows actions taken by the U.S. Education Department. One action the department took was to increase the funding the school was required to set aside to cover its federal student-aid obligations, based on concerns that stemmed over the uncertainty of the school’s accreditation status. The department told the school that it had to obtain permission before it could pay severances or bonuses, or raise the salary of its executives. Government approval would also be required before the school could admit new students who would use federal aid to help with their tuition.
Those directives come after a continuous string of lawsuits and investigations launched by multiple parties against the school, including several states’ attorney general offices, the Consumer Financial Protection Bureau and the Securities Exchange Commission. School officials deny any wrongdoing.
People with a lot of debt from student loans often struggle financially and may be at higher risk for bankruptcy. Anyone who is facing such problems may benefit from consulting an experienced attorney.
Source: The Washington Post, “ITT Technical Institutes shuts down after 50 years in operation,” Danielle Douglas-Gabriel, Sept. 6, 2016