A group of former students filed a class action lawsuit against the Department of Education on Wednesday, alleging the agency refuses to discharge eligible student loans for borrowers who attended defunct for-profit colleges. Represented by the nonprofit Student Defense, the plaintiffs target an unfulfilled Biden-era expansion of loan forgiveness.
The Bottom Line
- Plaintiffs allege the Department of Education has rescinded or failed to implement a January 2025 decision granting closed-school loan discharges.
- Affected borrowers carried debt from institutions owned by Career Education Corporation, Education Management Corporation, Education Corporation of America, and Bay State College.
- The department defends its refusal, stating the prior administration’s policy improperly shifted debt onto taxpayers.
Lawsuit Challenges Department Over Closed-School Discharges
The class action complaint, filed in federal district court, claims the Department of Education under President Donald Trump’s second administration has without explanation rescinded, abandoned, or failed to implement a determination made days before President Joe Biden left office in January 2025. That determination concluded that specific for-profit colleges had closed under “exceptional circumstances,” a classification that expands the look-back period for loan forgiveness.
For more than 30 years, department regulations have made discharges available to borrowers enrolled when a college closed or who withdrew within a specific look-back period prior to closure. Those rules allow the education secretary to extend that window if a school closed under exceptional circumstances. According to the lawsuit, borrowers now remain obligated to repay federal loans the secretary already determined are eligible for discharge, while interest continues to accrue and many face collection actions, including Treasury offsets and administrative wage garnishments.
Named Plaintiff Seeks Relief for Brooks Institute Debt
Kendrick Gaussoin, the named plaintiff in the lawsuit, carries debt from an unfinished degree at the Career Education Corporation-owned Brooks Institute before it shut down in 2016. When the Department expanded relief for Brooks students, I was overjoyed. I qualify, but my application was denied anyway,
Gaussoin said in a news release. Now I am a father of two, struggling to get by and still carrying debt for a school that failed me. The Department must honor its decision and give students like me the relief we were promised.
The department sent Gaussoin a letter explaining that he did not meet the pre-Biden regulation requirements for a loan discharge, defending its refusal to acknowledge the previous administration’s expansion. The Biden Administration was laser-focused on implementing unlawful policies to shift student loan debt onto the back of every single hardworking American taxpayer,
Ellen Keast, a department spokesperson, told NPR. Literally days before leaving office, the former Biden Under Secretary used the stroke of a (digital) pen to inappropriately expand the closed-school discharge period for certain institutions targeted by the previous Administration.
Precedents for Expanding the Look-Back Period
The dispute centers on administrative authority to adjust the look-back window for closed-school discharges. While the current administration rejects the Biden-era expansion, precedent exists for similar actions across political lines. In 2019, then-Education Secretary Betsy DeVos cited exceptional circumstances to expand the look-back period for students who took out loans to attend the now-defunct Art Institute of Colorado or Illinois Institute of Art.
The current litigation asks the federal court to compel the Department of Education to honor the January 2025 determination and process discharges for the affected class of borrowers.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
