Universal Technical Institute Loan Forgiveness

universal technical institute loan forgiveness

While many students complain about the difficulty of their studies, one thing remains even more challenging: the student loan covering the cost of education. The majority of students get loans to finance their education, hoping that they will find a better job and repay the debt. Unfortunately, things do not go as planned all the time, specifically if there is a pandemic knocking on your door unexpectedly. Currently, many student loan borrowers face challenges in meeting their obligations. Already, around 9% of borrowers for public schools and 14% for for-profit schools failed to repay the debt- defaulted, according to the National Association of Student Financial Aid Administration. Graduates of many for-profit schools, including the UTI, look for ways to reduce their debt obligations, such as Universal Technical Institute loan forgiveness programs.

The situation gets even worse when the school closes, even before graduation. Universal Technical Institute loan forgiveness can be achieved in several ways. As its one campus in Norwood, Massachusetts, closed, borrowers, can take advantage of Closed School Discharge. Others can apply for Public Service loan forgiveness, Borrowers’ Defense program, etc. Take a close look at available forgiveness programs to choose the one that suits your conditions.

UTI Loan Program

In 2008, after the financial crisis, Universal Technical Institute announced its $10 million student loan program. This program aimed to finance the education for students who have tight budgets and, ultimately, to fill the financial gap. Only the students who already exhausted the federal loan program and still cannot finance the education in UTI could qualify. The university took full responsibility for the repayment of the loans. This program was categorized as private student loans.

In 2017, the Education Department reported that the UTI loan program distributed more than $150 million. However, the institute faced challenges when it came to repayment. A significant number of students could not afford the repayment. In 2017, the institute could only collect $8 million in repayment, while it wrote off $18 million. It means, for every dollar collected, $2.3 was written off. 

Universal Technical Institute Lawsuit

Compared to other for-profit schools like ITT Tech or Corinthian Colleges, Universal Technical Institute did not face many lawsuits. In 2011, a former employee alleged that the university used compensation incentives illegal under Title IV regulations. Although there were not many Universal Technical Institute lawsuits, allegations against other for-profit schools might negatively affect UTI. In response, UTI increased its assistance for students through attractive scholarship progress. Yet, the tuition fee of the institute is still high.

How to Eliminate UTI Loan Program?

universal technical institute loan forgiveness

As discussed, the loan program created in 2008 is a private one. While it is easier to get Universal Technical Institute loan forgiveness for federal loans, it is not as easy for private student loan debt. Private lenders are independent of the government, which means federal student aid options do not apply to private loans. Besides, private lenders are more concerned about the profitability of their programs compared to the government. Hence, they would not allow forgiveness in most cases. 

There might not be a single Universal Technical Institute loan forgiveness for the private debt- whether incurred from the school or any other private organization. However, borrowers can decrease their debt obligations through refinancing. Borrowers can refinance their debt by getting a new loan from a different lender. Next, they need to use the proceeds from the new loan to repay the old loan. One might wonder what changes as the borrower still has debt. Read the benefits section to have a better understanding of how refinancing works. 

Benefits of Refinancing

Debt repayment takes many years. A borrower can have a student loan with a 20 year repayment period. Throughout this period, many opportunities emerge to refinance the debt and save some money. For example, market interest rates can decline. 

Such decline does not impact existing loans, but when the borrower receives a new loan, its interest can be lower. In this case, refinancing helps borrowers to save money. Refinancing might not be as attractive as Universal Technical Institute loan forgiveness, but it can surely assist the borrowers in repayment. An alternative case happens when the borrower improves credit performance. After repaying the old loan for five years, your credit score can increase. Borrowers with higher credit scores can qualify to lower interest rates. Hence, refinancing becomes attractive.

Besides, the borrowers might be dissatisfied with the loan servicers. In the case of the UTI loan program, it is provided by the Universal Technical Institute. The borrower might not like the customer service of the lender or the general operational quality. In this case, refinancing allows borrowers to get rid of the previous loan servicer/lender and contact a new one.


Private lenders provide refinancing services. Hence, they also need to ensure that the service user is reliable and will repay the new debt. As a result, such refinancing companies conduct extensive eligibility checks. The borrowers are required to meet three main criteria- stable income, high credit score, and provide a cosigner. A high credit score is usually 600 or higher. Such borrowers who also have a stable income source guarantee the payment. 

However, if you are still a student looking for Universal Technical Institute loan forgiveness, the chances are high that you neither have a stable income nor good credit performance. In such cases, the refinancing companies ask for a cosigner who is a third-party family member or friend. This person takes the responsibility of repayment if the borrower cannot repay the debt. 

What about Federal UTI Student Loans?

universal technical institute loan forgiveness

The loan program provided by the UTI is a private program. The solution mentioned above – student loan refinancing- works both for private and federal loans. However, if you have federal loans, be careful. Federal student aid programs allow Universal Technical Institute student loan forgiveness. If you refinance your federal loan, you will no longer be eligible for those forgiveness options. Hence, refinancing should be a last resort for federal loan borrowers.

In the following sections, we will discuss three well-known options for Universal Technical Institute loan forgiveness. However, keep in mind that there exist several other discharge and forgiveness programs. Even if you do not qualify for forgiveness, you can utilize other debt repayment/resolution strategies. Check the official Student Aid website or contact us for more information.

1. Closed School Discharge

This federal student aid program aims to help students whose schools close during enrollment or within a specified period after withdrawal. The discharge covers 100% of the student debt. As mentioned before, UTI’s one campus in Norwood, Massachusetts, closed. Students of this school can apply for this Universal Technical Institute loan forgiveness program. However, the borrower needs to meet several conditions.

First, you can only apply to the Closed School Discharge if you:

  • Were Enrolled 
  • Were On approved leave
  • Withdrew within 120 days before the closure (for loans distributed before July 2020)
  • Withdrew within 180 days before the closure (for loans distributed after July 2020)

Besides, if you transfer your credits in a closed school to a comparable program in a different school, you will lose your eligibility. You need to either stop your education or continue in a completely different program than the closed one. 

It is possible to get automatic qualifications for this program. If a borrower does not continue in a comparable program three years after the closure, the loan servicers will contact the borrower about automatic eligibility. However, borrowers do not need to wait for this period and can contact the loan servicers immediately to get this Universal Technical Institute loan forgiveness. 

2. Borrowers’ Defense to Repayment

Another UTI student loan forgiveness option, which is mostly used against for-profit schools, is Borrowers’ Defense to Repayment. This program was created with the aim to protect the students who face unfair treatment from the schools. For-profit schools have a history of lying to students about the true cost of student loans, education qualification, transferability of credits, or job replacement rates after graduation to attract the student. If a borrower believes that the school officials misled him/her, he/she can use this claim to be against the repayment of the incurred debt. 

Only Direct Loans qualify for this program. The main condition is proving that the student was misled, and if the school did not use fraudulent tactics, the borrower would not have incurred the debt. Hence, during the application, it is necessary to indicate arguments clearly. Besides, providing supporting documents as evidence is important. For example, borrowers can upload their email communications with the school officials or submit a brochure where false advertising techniques are clearly used. 

This Universal Technical Institute loan forgiveness program only works if you faced unethical, illegal action by the school regarding educational matters. Non-educational issues, such as physical harm, cannot be used against the school through this program to cancel the debt.

Opportunity in BDR

Borrowers’ Defense to Repayment program was popular during the Obama administration. However, during the Trump administration, Education Secretary Betsy DeVos did not support this program. She thought that this forgiveness option is unfair and a “free money” source. Hence, many borrowers who applied for forgiveness waited for a long time to get approval/rejection. Most of them faced rejections.

Luckily, president Joe Biden expressed his support for the Borrower’s Defense rule in his plan for education beyond high school. As a first step, the new Education Secretary will change the discharge calculation method. 

Previously, if the borrower gets approval, the discharge was calculated by comparing the borrower’s income to another person’s income studying in a comparable program. This calculation method had flaws. Sometimes when borrowers’ cases were approved, they got 0% discharge. Hence, the discharge calculation method should be changed. 

The Education Department recently announced that those borrowers who received approvals but the partial discharge of the debt will get full discharge now. Therefore, there emerges a hope that this Universal Technical Institute loan forgiveness program will be more useful for debtors in the future.

3. Public Service Loan Forgiveness

Public Service Loan Forgiveness

Public Service Loan Forgiveness is another option for Universal Technical Institute loan forgiveness. This program helps borrowers serving in the public sector, such as in a federal, state, local or non-profit organization. If you have qualified for this program, you can get rid of 100% of your debt. However, qualification takes some time. A borrower is only qualified when he/she makes 120 payments. Therefore, it takes at least ten years to apply for this Universal Technical Institute student loan forgiveness.

You can work either part-time or full-time. However, your weekly work hours should be a minimum of 30 which means that you will need to work in more than one position half-time. The 120 payments you make should be full, on time, and under the Income-driven repayment plans

Luckily, the forgiveness through the PSLF is not taxable. It means you do not need to worry about additional taxes if you receive the forgiveness.

Similar to Borrowers’ Defense, Biden also supports this program. He suggests simplifying the PSLF. Rather than waiting for ten years, borrowers can get $10,000 forgiveness per year of service. It would be possible to apply for this benefit a maximum of five times.  

Final Words

Many borrowers face challenges when it comes to repayment. If you are one of those borrowers, remember that there is a way out. This guide presented solutions both for federal and private loan borrowers. We discussed Universal Technical Institute loan forgiveness options like refinancing and programs like Closed School Discharge, Borrowers’ Defense, and Public Service Loan Forgiveness. However, it is not a complete list of debt resolution strategies you can apply. If you think these options do not fit your conditions, you can contact Student Loans Resolved for more information. Our debt experts will analyze your challenges and develop a suitable affordable plan to make you debt-free. Take a step now and contact us for a free consultation.

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