A group of former students has filed a class action lawsuit against the U.S. Department of Education, alleging the agency is refusing to discharge student loans that were previously determined to be eligible for forgiveness. Represented by the nonprofit consumer protection group Student Defense, the plaintiffs took out loans to attend for-profit institutions owned by Career Education Corporation, Education Management Corporation, Education Corporation of America, and Bay State College.
In January 2025, just days before President Joe Biden left office, his administration's Education Department ruled that these colleges had closed under "exceptional circumstances." This determination expanded the number of borrowers eligible for student loan forgiveness. Under regulations in place for over 30 years, discharges are available to those enrolled at the time of a closure or who withdrew within a specific "look-back period," which the education secretary can extend if exceptional circumstances exist.
The lawsuit, filed in federal district court this week, claims that the department, now under President Donald Trump's second administration, has rescinded or failed to implement the Biden-era decision without explanation. Consequently, borrowers remain obligated to repay loans already deemed eligible for discharge, continue to accrue interest, and face potential collection actions, including Treasury offsets and wage garnishments for those in default.
Kendrick Gaussoin, a named plaintiff in the suit, still carries debt from an unfinished degree at the CEC-owned Brooks Institute, which closed in 2016. Gaussoin stated that while he was overjoyed when relief was expanded for Brooks students, his application was denied despite his eligibility. He described himself as a father of two struggling to manage debt for a school that failed him, urging the department to honor its previous decision.
The Department of Education defended its refusal to acknowledge the expanded discharge period, sending Gaussoin a letter stating he did not meet pre-Biden regulation requirements. Ellen Keast, a department spokesperson, told NPR that the Biden administration focused on unlawful policies to shift debt onto taxpayers. She argued that the former Under Secretary inappropriately expanded the closed-school discharge period for targeted institutions just days before leaving office.
However, records indicate that the first Trump administration previously utilized similar measures. In 2019, then-Education Secretary Betsy DeVos cited "exceptional circumstances" to expand the look-back period for students who had attended the now-defunct Art Institute of Colorado or Illinois Institute of Art.
Sources: Inside Higher Ed.