Federal Court Blocks Student Debt Forgiveness for Defrauded Borrowers
Matthew Arrojas
August 8, 2023
The Biden administration’s borrower defense rule made it easier for former students to have their student loans forgiven. The U.S. Court of Appeals for the Fifth Circuit has put it on hold pending appeal.
The Department of Education’s new borrower defense rule took effect on July 1.
That rule made it easier for former students to get federal student loan debt forgiveness if they prove their former institution misled, defrauded, or aggressively recruited them.
The U.S. Court of Appeals for the Fifth Circuit on Monday issued an injunction pending appeal that prevents the rule from going into effect.
The ruling stems from a lawsuit filed last February by for-profit colleges and universities.
A federal court has blocked a new rule designed to make it easier for defrauded students to get student loan forgiveness.
That rule, which has been in effect since July 1, makes it easier for former students to qualify for federal student loan debt forgiveness if they prove their former institution misled, defrauded, or aggressively recruited them.
Career Colleges and Schools of Texas (CCST), a trade organization representing 70 for-profit institutions, filed a lawsuit last February seeking to block enforcement of the rule. U.S. District Judge Robert Pitman previously denied a motion for an injunction, but CCST appealed the court’s decision.
