US court blocks Biden debt relief rule benefiting defrauded students

ITT Educational Services

07/08/2023 22:06

By Nate Raymond
       Aug 7 (Reuters) - A federal appeals court on Monday
blocked the Biden administration from proceeding with another
piece of its student debt relief agenda, an effort to make it
easier for people who are defrauded by their schools to have
their loans forgiven.
    At the request of a group representing for-profit colleges,
the New Orleans-based 5th U.S. Circuit Court of Appeals
prevented the rule from taking effect pending the outcome of an
appeal to be heard in November. 
    The three-judge panel gave no reason for why it was granting
the emergency injunction sought by the trade group, Career
Colleges and Schools of Texas (CCST), which is appealing a
lower-court judge's decision to not block the rule.
    The rule is separate from Biden's more sweeping student debt
relief plan. The Supreme Court in June blocked his
administration from canceling $430 billion in student loan debt
for 43 million borrowers. The Democratic president has since
announced plans to provide relief for student loan borrowers
using a different approach.
    The 5th Circuit had previously administratively stayed the
regulation so it could weigh the request. The panel's three
judges -- Edith Jones, Kyle Duncan and Cory Wilson -- were all
appointed by Republican presidents.
    Neither CCST or the U.S. Department of Education responded
to requests for comment.
    CCST sued in February after the Education Department in
October finalized a rule changing a "borrower defense to
repayment" program that allows students to seek debt relief if
their schools mislead them.
    Students who have received debt forgiveness through the
borrower defense program have attended for-profit colleges
including Corinthian Colleges and ITT Technical Institute.
    The Biden administration's rule amended the grounds for
borrower relief, established new procedures through which the
department would review their claims and allowed for a means for
the agency to provide relief to entire groups from one school.
    CCST called the rule an unlawful and unconstitutional plan  
designed "to accomplish massive loan forgiveness for borrowers
and to reallocate the correspondingly massive financial
liability to institutions of higher education."

 (Reporting by Nate Raymond in Boston
Editing by Alistair Bell)
 ((Nate.Raymond@thomsonreuters.com and Twitter @nateraymond;
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nate.raymond.thomsonreuters.com@reuters.net))