College students whose school has shut down or committed fraud may soon be eligible for financial relief from federal regulators. 

Next July, barring any changes after President-elect Donald Trump takes office, new rules from the Department of Education could lead to an increase in student loan forgiveness. The new rules make it easier for students to get their loans dismissed if their college closes or if students believe they were swindled by their school.

Several high-profile, for-profit colleges have closed their doors in recent years leaving students without a degree—and with student loans they can’t repay. 

While students of schools that have shut down recently tried to get their federal loans discharged before the schools closed there was no formalized process to do so, says Betsy Mayotte, director of consumer outreach and compliance for American Student Assistance, a nonprofit organization that provides financial education to college students.

If Your College Shuts Down

While most of the new rules don’t go into effect until next July, borrowers whose schools closed on or after November 1, 2013, and who have not been able to transfer their credits to another school after three years will have their federal debt automatically discharged.

The student loan forgiveness rule changes will immediately benefit students who had taken out loans to attend Corinthian College or ITT Technical Institutes, which are among the schools that have shut down in recent years leaving many students with debt and credits that are difficult to transfer.

Loans will be dismissed automatically for students who have not been able to transfer their credits and complete their degree within three years of the school’s closure. However, Mayotte says borrowers can speed up the process by completing required documents and emailing them to

In the future, when schools close, both the schools and the lenders will be required to give students an application to apply for student loan forgiveness. The new rulings do not apply to students who took out private loans to pay for school.

If You Believe Your College Defrauded You

The new rules also include what are known as Borrower Defense Rules, which will provide borrowers with a more streamlined process to file claims if they believe they have been lied to or mistreated by their college.

“The Department of Education has long had rules on the books about how borrowers can claim a defense to repayment for a loan, but there were no federal standards or rules around the process,” says Karen McCarthy, director of policy analysis at the National Association of Student Financial Aid Administrators.

Students could feel defrauded if, for example, a college attempts to get them to enroll by inflating its job-placement statistics.

Starting next July, if the rules go into effect, schools will no longer be able to require students to sign arbitration agreements, which prevent class-action lawsuits. So a borrower would be able to take the college to court for any disputes related to their education or their loans.

“Hundreds of thousands of students have been harmed in recent years by predatory schools that have treated them as little more than dollar signs,” said Suzanne Martindale, staff attorney for Consumers Union, the policy and mobilization arm of Consumer Reports. “The action by the Department will help students get the relief they deserve and ensure schools are responsible for the cost of canceled loans when they engage in fraud.”

Even so, Consumers Union says the new student loan forgiveness rules, which apply to loans taken out after July 1, 2017, are disappointing because the standards are tougher for borrowers to meet than the current standards required by state laws.

If you have a student loan and feel you've been wronged, you should visit the website of the Department of Education where you'll find more information about how to file a claim.