It's been a rough week for students at ITT. On Tuesday they learned their school was closing its doors after the U.S. government cut off the flow of federal funds.
Students who just started a new term suddenly had to find an education alternative. Worse still, many were stuck with student loans.
Fortunately, there may be some options. The Consumer Financial Protection Bureau (CFPB) reports ITT students who were attending ITT when it closed and had not completed a degree program may be able to cancel their student loans by applying for a student loan discharge.
Students may be eligible for a complete discharge of Direct Loans, Federal Family Education Loan (FFEL) Program loans, or Federal Perkins Loans if they were enrolled when the school closed, or the school closed within 120 days after they withdrew.
The first step is to contact your loan servicer about the application process to discharge a loan. CFPB says you may also need to contact your school to obtain your academic and financial records. CFPB suggests contacting the licensing agency in the state where you attended school to get help in acquiring those records. The documents may help support your discharge claim.
You can get more information about that here.
You can't transfer the credits
There's another thing to consider. If you are successful in discharging your student loans, you won't owe the money you borrowed to pay ITT, but you won't be able to transfer any credits you earned there either. Essentially, you'll be starting over.
However, that might prove to be a good option since it is highly likely you'll be able to pursue the same course of study at a community college, or online public school at much less cost. In July, we reported on a new program allowing employees of National Federation of Independent Businesses member companies to pursue a degree for $3,000 a year.
Private loans may be a problem
If you were attending ITT using private student loans, you'll find your options are more limited. In most cases, you'll have to pay it back. However, CFPB notes that some states have programs to assist students with private student loans in their college shuts its doors.
The U.S. Department of Education barred federal funds from being used at ITT because it said the for-profit school was not in compliance with accrediting criteria and probably would not be able to get in compliance. Secretary of Education John B. King Jr. said the department acted out of its responsibility to both students and taxpayers.