Borrower Defense to Repayment Rule Heads to U.S. Supreme Court While Student Loan Forgiveness Enters Final Rounds
January 23, 2025
Supreme Court Review of 2022 BDR Final Rule
On January 10, 2025, the U.S. Supreme Court granted the Department of Education’s petition for a writ of certiorari to review the U.S. Court of Appeals for the Fifth Circuit’s decision in Career Colleges and Schools of Texas v. Department of Education that preliminarily enjoined, on a nationwide basis, the 2022 borrower defense to repayment (BDR) final rule. 87 Fed. Reg. 65,904 (Nov. 1, 2022). The scope of the Supreme Court case will be limited to the first question presented: “[w]hether the court of appeals erred in holding that the Education Act does not permit the assessment of borrower defenses to repayment before default, in administrative proceedings, or on a group basis.” The case will not involve the second question presented by the Department: “[w]hether the court of appeals erred in ordering the district court to enter preliminary relief on a universal basis.”
Career Colleges and Schools of Texas (CCST) initially filed its lawsuit on February 28, 2023, in the United States District Court for the Northern District of Texas to enjoin and vacate the 2022 BDR rule. See CCST v. U.S. Dep’t of Educ., 681 F. Supp. 3d 647 (W.D. Tex. 2023). Among its other claims, CCST argued that the final rule creates unlawful processes, fails to serve any legitimate purpose under the Higher Education Act and “represents enormous executive overreach” by the Biden administration in violation of the Department’s statutory authority and the Constitution’s separation of powers.
The plaintiffs sought a preliminary injunction, which was later denied by the U.S. District Court for the Western District of Texas. As a result, the plaintiffs pursued an interlocutory appeal to the Fifth Circuit. On April 4, 2024, the Fifth Circuit held that the District Court erred in its decision denying a preliminary injunction and, over the Department’s objection to nationwide relief, ordered the District Court to postpone the effective date of the 2022 BDR rule pending final judgment in the case. See CCST v. U.S. Dep’t of Educ, 98 F. 4th 220 (5th Cir. 2023). The Department sought rehearing in the Fifth Circuit, which was denied, and then petitioned the Supreme Court for review.
