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On Monday, the U.S. Court of Appeals for the 5th Circuit blocked a President Joe Biden’s administration rule that aimed to make it easier for defrauded borrowers to obtain student loan debt relief.
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The court issued an injunction to prevent the government from implementing regulations that took effect last month while it considers a lawsuit brought by Career Colleges and Schools of Texas, which represents 70 for-profit colleges.
The U.S. Education Department said it is reviewing the order and “won’t back down in our efforts to take on predatory colleges, provide relief to borrowers who have been cheated or had their school close, and hold institutions accountable for deceptive schemes,” The Washington Post reported.
In February, the career college association filed a lawsuit against the U.S. Department of Education to block a rule updating regulations that govern the discharge of federal student loans.
This rule was designed to apply when borrowers are defrauded by their colleges, permanently disabled, spend years in public service or face a school closure.
The Washington Post report pointed out that the changes are some of the most significant updates to the federal student loan repayment system in years.
To date, the Biden administration has approved US$13.5 billion in student loan discharges since 2021 for roughly 1 million borrowers who were defrauded by their colleges. Roughly half of those people have had their balances cleared.
Multiple U.S. news outlets reported that the three judges on the panel that granted the injunction in favor of Career Colleges and Schools of Texas were all appointed by Republican presidents.
