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Do I Have To Pay My Student Loans If My School Shuts Down?

student loans, school close down, school shut down, ITT, chapter 13, bankruptcy sacramento, chapter 7, attorney, attorneys, lawyer, lawyers, California, CA, bankrupt, Bankruptcy, Stockton, citrus heights, roseville, sacramentoAs news of the shut down of ITT Technical Institute reverberates throughout the United States, many students who took on debt to attend this and other for-profit colleges are wondering if they will have to pay their student loans back if their chosen school shuts down. The answer to this is still uncertain as everyone’s situation is different. For example, many ITT students were veterans who used the GI Bill in order to pay for schooling, a plan that allows for a specific amount of money to be applied towards a degree. When that money runs out, there’s no going back to the “watering hole” for additional funds.

Luckily, there is student loan forgiveness for school shut downs for both Direct Loans and Federal (FFEL) Program Loans called “closed school discharge”. While there are stipulations and conditions to meet, if your school closes while you are enrolled and you don’t complete your program because of that, you may be eligible for a 100% discharge of your student loans. Additionally the Department of Education has actually set up a website hosting a series of webinars explaining student borrow rights.

One important stipulation from the U.S. Department of Education: you can either have your loan forgiven and start over completely or pay off the loan and get a new loan to finish at a different school. These programs have been around for sometime as this isn’t the first for-profit college that has closed down leaving students unsure of their future. Last year in 2015, Corinthian College closed many campuses nationwide, leaving students with loads of debt and no degree.

For those individuals wishing to continue their education, the good news is that many other colleges are offering transfer credits for those displaced students. Contacting the admissions departments of the local colleges in your area will usually tell you if your credits will transfer.

In other positive news, students in California will have the ability to apply for relief from private student loans and for refunds of cash they paid to ITT through the state’s Student Tuition Recovery Fund. The California Student Tuition Recovery Fund (STRF) is a fund set up by the state to reimburse students when their state-approved schools shut down. For those students looking for student loan debt relief of this kind, you can go here to fill out the application.

College debt affects nearly 1 out of every 5 households in the U.S. equating to around 40 million Americans on the hook for $1.6 trillion dollars. For individuals with secured and unsecured debt in addition to their student loans, declaring bankruptcy may be a solution to your problems. While student loan debt is not currently dischargeable through filing bankruptcy, a Sacramento Bankruptcy Attorney will be able to assess your debt and offered you educated information on the best way to get a handle on your finances. You may be able to lower or eliminate other debt, freeing you up to pay down your student debt. A competent bankruptcy attorney will also be able to advise you when a debt management program may be more beneficial.

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