Former Students Sue over Student Loan Discharges

Former students filed a class action lawsuit against the Department of Education on Wednesday, alleging it refused to discharge their student loans.

By Career Ahead AI · United States — AI-assisted, fact-verified against cited sources. Readers should verify key facts.

The suit challenges relief for students at closed colleges

Former students filed a class action lawsuit against the Department of Education on Wednesday, alleging it refused to discharge their student loans. The case concerns a federal decision that expanded the borrowers eligible for relief after certain colleges closed. The plaintiffs say the department has not carried out that decision, leaving them responsible for loans they say should qualify for discharge. The complaint puts the department’s handling of the expanded eligibility at the centre of the dispute.^¹²³

The plaintiffs are represented by Student Defense, a nonprofit consumer protection group. They borrowed to attend for-profit colleges owned by Career Education Corporation, Education Management Corporation, Education Corporation of America and Bay State College. The suit links their claims to those schools’ closures and to the department’s decision about the circumstances of those closures. It does not describe a general cancellation of student debt; it concerns borrowers connected to the named colleges and the eligibility rule at issue.^¹²³

They borrowed to attend for-profit colleges owned by Career Education Corporation, Education Management Corporation, Education Corporation of America and Bay State College.

A closure rule turns on when a student left

Days before President Joe Biden left office in January 2025, his Education Department determined that the colleges had closed under “exceptional circumstances.” That designation expanded the number of borrowers eligible for student loan forgiveness. The lawsuit now contests what happened after that determination: the plaintiffs allege the department “without explanation rescinded, abandoned, or failed to implement” the Biden-era decision. The claim concerns the implementation of a specific eligibility expansion, rather than the existence of a discharge rule itself.^¹²³

You may also like

Education & University Insights

English UK Reviews Student Protection After Provider Closures

The review will test what students should receive after a provider closes, including treatment of prepaid tuition, accommodation and other package costs.

Read More →

For more than 30 years, department regulations have provided discharges to borrowers who were enrolled when a college closed or who withdrew during a set period before closure. That pre-closure window is called the “look-back period.” The rule makes timing central: a borrower’s connection to a school must fall within the relevant enrollment or withdrawal period. The department’s exceptional-circumstances determination widened the pool of eligible borrowers, according to the account of the decision underlying the lawsuit.^¹²³

A named plaintiff says his application was denied

Kendrick Gaussoin, the named plaintiff, still carries debt from a degree he could not finish at Brooks Institute, which was owned by Career Education Corporation. The school shut down in 2016. His case gives a specific example of the dispute: a borrower says he was left with debt after his college closed, even though the department later expanded relief for students from that school. The lawsuit puts his application and the department’s response to it in focus.^¹²³

Gaussoin said his application for relief was denied despite his eligibility. “When the Department expanded relief for Brooks students, I was overjoyed. I qualify, but my application was denied anyway,” he said in a news release. His statement describes the gap the plaintiffs are asking the court to address: the department announced an eligibility expansion, but he says that expansion did not result in relief on his own application. The lawsuit challenges the department’s handling of that decision.^¹²³

The department spokesperson defended the Biden-era approach

Ellen Keast, a Department of Education spokesperson, told NPR: “The Biden Administration was laser-focused on implementing unlawful policies to shift student loan debt onto the back of every single hardworking American taxpayer.” The statement criticises the Biden administration’s approach to student loan relief. The lawsuit, by contrast, alleges that the department failed to implement or maintain the specific decision covering the colleges named by the plaintiffs. The statement does not explain why Gaussoin’s application was denied.^¹²³

The use of “exceptional circumstances” has a prior example in the department’s handling of closed colleges. In 2019, Education Secretary Betsy DeVos invoked the same standard to expand the look-back period for students who borrowed to attend the Art Institute of Colorado or the Illinois Institute of Art. That earlier action also used the standard to widen eligibility tied to college closures. The current lawsuit concerns a later determination involving the colleges attended by these plaintiffs and whether the department carried it out.^¹²³

You may also like

Education & University Insights

Emory Removes Flock Cameras as Student Campaigns Spread

Students at several universities are mobilizing against Flock cameras, citing data-sharing risks and possible use against protesters.

Read More →

In 2019, Education Secretary Betsy DeVos invoked the same standard to expand the look-back period for students who borrowed to attend the Art Institute of Colorado or the Illinois Institute of Art.

Check your college's closure date

If you attended a for-profit college that closed, your loan discharge depends on when you left. The look-back period has been the standard for over 30 years, and the exceptional-circumstances rule widened it for specific schools. Before assuming you qualify, verify your withdrawal date against the relevant window. A borrower who qualified still had his application denied, so do not rely on announcements alone. Keep records of your enrollment and withdrawal dates to support any claim you file.^¹²³

The fight over discharge implementation is not over. Courts have blocked more than $400 billion in proposed relief since 2023, and the SAVE plan remains blocked. If you hold federal student loans, plan for the possibility that relief you expect may not arrive. Roughly 8 million borrowers may qualify through at least one discharge pathway, but approval is not guaranteed. Treat any forgiveness as uncertain and budget for continued payments while legal challenges play out.^¹²³