August 7, 2023
The Fifth Circuit blocked Biden’s new rules to ease the debt relief process for defrauded borrowers.
A for-profit group sued the administration, arguing the rules would harm impacted schools.
The changes to borrower defense are now blocked as the legal process plays out.
President Joe Biden’s efforts to help student-loan borrowers just got dealt another blow in court.
On Monday, a three-judge panel — appointees of former Presidents Ronald Reagan and Donald Trump — in the Fifth Circuit Court of Appeals blocked the Education Department’s new rules to make it easier for student-loan borrowers who said they were defrauded by the school they attended to get their debt wiped out.
At the end of June, Career Colleges and Schools of Texas, a for-profit college group, filed a lawsuit against the Education Department to block its latest changes to the borrower defense rules, which allow a borrower who proved they were defrauded to have their loans discharged. The rules would create a more streamlined application process for borrowers seeking debt relief, along with expanding the types of misconduct that would qualify a borrower for a loan discharge.
CCST argued in its original complaint that the department stacked “the deck in favor of borrowers and against schools; the Rule imposes strict liability upon schools for even unintentional erroneous representations or omissions, and then irrationally presumes that every borrower in the group would not have attended the school but for the school’s act or omission, whatever it is.”