Texas For-Profit Colleges Sue to Block Biden Borrower Defense Rule

Best Colleges

Matthew Arrojas

March 6, 2023

If successful, it will become more difficult for borrowers defrauded by their college to have their federal loans discharged.

• The Department of Education plans to institute new rules that erase student debt for borrowers whose college defrauded them.

• A Texas trade association representing for-profit colleges filed the lawsuit to block the rule from going into effect.

• The suit claims the department overstepped what it is legally allowed to change with this rule.

A new lawsuit puts at risk a Biden administration rule designed to make it easier for defrauded students to have their loans forgiven.

Career Colleges and Schools of Texas, a trade organization representing 70 for-profit institutions, filed a lawsuit Feb. 28 that seeks to block the new borrower defense to repayment (BDR) rule from going into effect on July 1.

The trade group argues that the changes proposed by the Department of Education (ED) go beyond its authority. The group likewise argues that the proposed changes will unfairly impact its member institutions.

The revised BDR rule dates back to negotiated rulemaking sessions from late 2021 during which ED and other higher education stakeholders jointly created a rule that would lower the bar for borrowers to qualify for loan discharges under BDR.

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