Biden’s attempts to help defrauded student-loan borrowers receive debt relief were blocked by a conservative court.

Biden's attempts to help defrauded student-loan borrowers receive debt relief were blocked by a conservative court.

Biden’s Efforts to Help Student-Loan Borrowers Face Another Blow in Court

Debt Relief

President Joe Biden’s ongoing efforts to alleviate the burden on student loan borrowers have hit a roadblock in court. Recently, a three-judge panel in the Fifth Circuit Court of Appeals, comprised of appointees from former Presidents Ronald Reagan and Donald Trump, blocked the Education Department’s new rules aimed at simplifying the debt relief process for defrauded borrowers.

The new borrower defense rules implemented by the Education Department intended to streamline the application process for borrowers seeking debt relief. The changes also expanded the types of misconduct that qualified borrowers for loan discharge. However, the Career Colleges and Schools of Texas (CCST), a for-profit college group, filed a lawsuit against the Education Department, arguing that the rules heavily favored borrowers and unfairly burdened impacted schools.

CCST claimed that the new rules, which impose strict liability on schools for unintentional errors or omissions, were biased against educational institutions. They contended that the rules assumed that every borrower in a particular group would not have attended a school if not for the act or omission of the institution. With their lawsuit, CCST sought an emergency injunction to prevent the Education Department from implementing the new rules.

Initially, a district court rejected CCST’s request for an emergency injunction. However, the Fifth Circuit panel heeded CCST’s plea and temporarily blocked the implementation of the new rules.

The Education Department and CCST have yet to respond to Insider’s request for comment. However, Aaron Ament, president of the borrower protection group Student Defense, expressed the urgency of borrower relief, stating, “We cannot afford a green light for dishonest schools to continue harming students.” Ament emphasized the importance of holding institutions accountable for defrauding borrowers, maintaining that without these protections, countless students remain vulnerable to exploitation by profit-seeking higher education institutions with limited accountability.

In a legal filing in July, the Education Department challenged CCST’s claims, asserting that the alleged injuries CCST suffered were speculative and insufficient to justify irreparable harm directly caused by the new rules. The department further argued that even assuming some irreparable harm, it paled in comparison to the damage caused by an injunction from the public’s perspective.

While the legal proceedings unfold, the Education Department’s new rules for borrower defense will remain blocked. Jason Altmire, president of Career Education Colleges and Universities, a group representing for-profit colleges, expressed satisfaction with the court’s decision. Altmire emphasized that given the likelihood of the rule being struck down during the ongoing legal process, implementing it would be unjustifiable.

The court’s ruling represents a setback for President Biden’s agenda to support student-loan borrowers. However, it highlights the complexity and challenges inherent in striking a balance between helping defrauded borrowers and ensuring the fair treatment of educational institutions. As the legal process moves forward, the fate of these new rules hangs in the balance, leaving borrowers at risk and underscored by the urgent need to protect them from unscrupulous practices in the higher education sector.