An estimated 300 former students of the shuttered Charlotte School of Law will now be eligible to have their federal loans discharged.
The U.S. Department of Education on March 9 announced that it has extended the time period for former Charlotte students’ eligibility under a rule that allows those enrolled at higher education institutions that shut down to walk away from their federal loans—what is known as a closed-school discharge.
“My focus is and will continue to be on doing what’s right for individual students,” said Education Secretary Betsy DeVos in an announcement of the extension. “Several students, through no fault of their own, fell through the cracks as Charlotte School of Law closed. It’s important that they too, are made whole.”
The closed-school discharge rule typically covers federal loan borrowers who were enrolled at the time of closure, or who withdrew no more than 120 days before their campus shut down. In the case of Charlotte, which officially closed down in August, only those who were enrolled at the time of closure or who left the school by April were eligible.
That meant the many students who left or took leaves of absence in January 2017—after the Education Department revoked the school’s access to federal loans in response to problems with its American Bar Association accreditation—were not eligible to shed their federal loans.
Now, the closed-school discharge period will apply to any Charlotte student who withdrew on or after Dec. 31, 2016. The Education Department invoked a provision allowing it to extend the 120-day eligibility period under exceptional circumstances.
North Carolina Attorney General Josh Stein requested the extension in April, when the eligibility of students who withdrew from the school prior to the start of the spring semester was set to expire. (Stein also launched an investigation into whether the school was violating state consumer protection laws.)
“A closed-school discharge represents a real chance for those students to make a fresh start,” he said in an announcement March 9. “I look forward to working with the U.S. Department of Education to ensure that all eligible former Charlotte School of Law students know how to take advantage of this option.”
Not everyone who attended Charlotte will be eligible for loan discharges, however. Students who transferred credits earned at Charlotte to another law school cannot walk away from their loans under the rule.
The Education Department informed Charlotte on Dec. 19, 2016, that it was ending it eligibility for federal student loans—a major blow to a law school already struggling to maintain its ABA accreditation. That move prompted a flood of students to withdraw or transfer to other schools.
Charlotte limped along throughout the spring 2017 semester, continually assuring remaining students that it was working to restore federal loan eligibility. The school arranged access to private loans for students in the interim.
The Education Department eventually released the federal loans for which the remaining students had already been approved at the start of the academic year, but only at the end of the spring semester. Some observers speculated that the delay was intended to prevent Charlotte from cashing the federal loan checks then immediately closing shop.
The law school finally threw in the towel in August, after the North Carolina University of North Carolina System’s board of governors revoked its license to operate in the state.