What to Do if Your University Closes its Doors

By Elizabeth Rittiman - May 13th, 2019


A recent rash of colleges and universities have gone out of business, leaving students in a precarious position. What do you do when your school closes? Alumni are often left wondering if their degrees or certificates from closed schools are still valid.  

Schools are closing for reasons that range from financial troubles to suspended or revoked accreditations. (Education Drive, an education-industry publication, lists more than 50 schools that have, since 2016, either closed or merged with other institutions.)

If your college or university closes, don’t panic: There are still ways to complete your education or obtain proof of earned degrees.

Continuing Your Education

You’ve already invested a lot of time and money into your education. Don’t quit now! Your current school may provide information on transfer or degree-completion options; be sure to review them before considering alternatives.

  • Teach-out – A teach-out is an agreement between schools that provides for the equitable treatment of students and an opportunity for students to complete their program of study. If your school is offering a teach-out option, and you are comfortable with their ability to deliver on that promise, you can stay the course.
  • Transfer to a new school – If you can’t or are hesitant to stay at your current school, it’s time to explore other options. Check to see if your school has made arrangements with another institution to make transferring easier. If they have, make sure that school can provide you exactly what you are looking for. Don’t settle or take unnecessary risks. Find the school that provides the programs you desire, with the credibility and stability to support your long-term goals.

Transferring credits does have limits. Most schools will only take up to 60 or 90 credits, depending on the length of the degree program you’re choosing. Be involved when your transcripts are being reviewed — and don’t be afraid to ask for a second review if you feel something was missed in your credit evaluation.

Paying School Loans or Tuition Bills

Most students wonder how their school’s closing will affect their loans. The answer isn’t simple, as it actually depends on how the school was closed. If the school completely shut down, you may be eligible to discharge your federal student loans. If the school is offering a teach-out option, you can opt out and still may qualify to have your loans discharged — though this option is not available if the school merged with or was purchased by another school.

If you are planning on discharging your loans, please remember:

  • You cannot discharge your loans if you are transferring to another school.
  • If you discharge your loans, and then complete your degree elsewhere, you could be liable for those loans again.
  • Because a discharged loan is counted as taxable income, make sure you understand the financial implications of discharging loans.

For more information about discharging a student loan because of a school closure, visit https://studentaid.ed.gov/repay-loans/forgiveness-cancellation/closed-school.

Transcripts and Completed Degrees

When your school closes, it’s critical to consider where documentation for your education stands.

Alumni may be concerned about how to explain or prove their education to an employer. Don’t worry: Your degree from a closed school is valid! Still, it’s a good idea to have a copy of the certificate or diploma that was given when you completed your degree.

Some shuttered schools will set up a document repository with another institution, while others may use a transcript service. We recommend ordering multiple copies of your transcripts, as well as saving a copy of the current catalog, for your records. Additionally, another school or the state’s Department of Higher Education will assume responsibility for storing records. The U.S. Department of Education has a “Closed School Guide for Students” to help you get your official transcripts.

Comments 2

  • What happens if you haven’t taken out loans and the school doesn’t teach out. I’m in a medical coding program and am told none of the classes I’ve taken will transfer to another school and I don’t believe they will teach out. I’ve put around $2500 in and will likely get nothing out of this. Is there legal recourse for me since they didn’t deliver on their end?

    • Hi Patty. Thank you for your comment. While this blog article provides advice on what to do if your university closes, we are are unable to provide legal advice.

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