NAICU Washington Update

House Holds Hearing on Closed School Discharges

October 01, 2021

The Subcommittee on Higher Education and Workforce Investment of the House Committee on Education and Labor held a hearing this week focused on improving the Closed School Discharge program, which provides relief to students when their school suddenly closes.

Subcommittee Chair Frederica Wilson (D-FL) expressed the importance of ensuring that students are able to adequately have their loans discharged should an institution close. She and her democratic colleagues shared their opposition to the current process and supported the need for automatic discharges. 

Highlighted during the hearing were the findings of a recent Government Accountability Office report, including:
  • About 246,000 borrowers were enrolled at a college that closed from 2010 through 2020, most of whom attended for-profit institutions;
  • Over 40% of borrowers enrolled at a college that closed did not complete or continue their education;
  • The discharge process provided relief to many borrowers who struggled to repay their loans; and 
  • Although they were eligible for relief, most borrowers who received automatic discharges had previously struggled to repay their loans.
Subcommittee Ranking Member Greg Murphy (R-NC), and his republican colleagues, expressed the importance of protecting taxpayer dollars during the discharge process.  They also spoke about their opposition to the Department of Education retroactively forgiving $1.1 billion in closed school discharges to an additional 115,000 borrowers who attended the now-defunct ITT Technical Institute.

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