Are you confused about why your student loan says closed? You are definitely not alone. At one point or another, most people have sat staring at the screen wondering what to do because their loan is closed.
If you have not heard, student loans have become difficult to get, and the economy is not getting any easier. Before applying for a student loan, ensure you read the fine print because they differ vastly from bank to bank.
Why does my Student Loan say Closed?
Your student loan may say closed probably because the lender has simply chosen not to provide you with additional funds. This means you’re no longer repaying your original loan balance. First of all, it is important to know that your student loan is not actually closed.
How to Troubleshoot a Student Loan that says it is Closed
If you have a federal student loan, your lender probably did not close it. You can check by logging into the National Student Loan Data System.
If the status of your student loan is “closed,” that means one of two things:
You have already paid off your federal student loan, and it was discharged due to a hardship.
This includes bankruptcy, which is one of the most common reasons for a federal student loan to be discharged;
If you have a Federal Direct Loan, and it says it is closed, and I cannot pay online. How do I get it reopened?
- Contact your loan servicer to ask if they can re-open it. If you have a FFEL loan, contact the lender.
- You might need to call the number on the back of your FSA ID card. This will assist to verify your identity before they can reopen your account.
- If you don’t know who your servicer is or where to call, try contacting your loan holder.
What is the Closed Status for a Student Loan?
Closed status means that you no longer make payments on the student loan. The borrower might request closed status, or might be paid off. If a borrower requests closed status, the servicer must close the loan. This is so unless there is an outstanding balance or unless the borrower owes a fee such as a late payment fee.
If a borrower has multiple loans with multiple servicers and requests closed status, the servicer must close all of the loans in order to comply with this federal requirement.
Closed status may also happen automatically if your loan enters into default. For example, if you do not make a payment for 270 days (nine months), your loan will go into default, and the servicer will close your loan.
In some cases, even if you have made all of your payments on time, your loan may go into default. As a result, it will be closed by your servicer.
For example, if you have permanently stopped attending school before graduating from college, your lender will notify you that it plans to close your loan.
In this case, if you want to continue paying back your student loans, you can contact your lender and ask them to change their decision to close your account.
Also, seek ways of paying off your loan. You can try to short your student loan if that is possible. But the best way is to just follow the rules.
FAQs on Shorting Closed Loans
Federal student loan closed on credit report
The closed status of federal student loans means that the lender has canceled the loan and is no longer in repayment. It is still possible to get a credit score if you have closed status loans.
Generally, if you have federal student loan closed status, you will be better off having payments show up on your credit report than not having them show up at all.
Why does my student loan say closed on my credit report?
Closed status for student loan shows up on your credit report and indicates that the loan was paid in full, settled, or the account is not being pursued by creditors.
The lender may have chosen to close the account because no payments have been made for over a year. This prevents collection activity from being reported to the credit bureaus.
Federal student loans sold to private
Such can happen for several reasons, such as consolidation, default, or if you are in financial distress. The sale of Federal student loans is a very common practice and will not affect your repayment terms or eligibility for student loan forgiveness.
All Federal student loans follow the same general rules and regulations. The only difference is the entity collecting your payments. If your loans are sold to a private company, it does not change the loan terms.
Why my student loan does say paid in full
The first and most common reason is that you simply just paid it off. If this is the case, then you can breathe a sigh of relief, as this indicates that all you owe for your student loans have been paid off.
Is there student loan forgiveness due to Covid?
There is no such thing as student loan forgiveness due to Covid. The federal government has many different programs in place to help those who struggle to pay their student loans.
These programs vary depending on the type of loans you have and your employment status, but there may be options available to you.
