Borrower Defense Rules Blocked Again
Katherine Knott
April 8, 2024
The Biden administration’s new rule making it easier for a defrauded borrower to seek debt relief has “numerous statutory and regulatory shortcomings,” a federal appeals court ruled last week. The judges said that a lawsuit seeking to overturn those regulations is likely to succeed. The administration is expected to appeal the ruling to the U.S. Supreme Court.
The new “borrower defense to repayment” rules, which were finalized October 2022, have been on hold since last summer pending appeal after a Texas district court declined to issue a preliminary nationwide injunction. Career Colleges & Schools of Texas (CCST), a trade association representing for-profit colleges in the state, sued to block the regulations from taking effect. The group argued the rules exceeded the department’s authority and violated the Constitution.
Under the borrower defense to repayment program, borrowers can apply for debt relief if their college or university misled them or violated certain state laws. The new regulations simplified the application process for affected students and allowed the department to automatically discharge student loans in some cases.
