Judge Halts Student Loan Forgiveness – Intercessors for America

President Biden continues to move forward with efforts to forgive student loans and now another court has blocked it.

From The Epoch Times. In the latest challenge to President Joe Biden’s wide-ranging efforts to find ways to forgive student debt, a federal appeals court has blocked parts of an Education Department rule that sought to make it easier for student borrowers to get relief if they were the victims of fraud or were misled by colleges.

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In a case that pits the Career Colleges & Schools of Texas (CCST) against the U.S. Department of Education, the New Orleans-based U.S. Court of Appeals for the 5th Circuit issued an order on Aug. 7 (pdf) that puts a hold on implementation of the so-called “borrower defense” provision of a Biden administration rule that meant to expand the triggers for student debt relief.

“It is ordered that appellant’s opposed emergency motion for injunction pending appeal of the borrower-defense and closed-school provisions of a ‘rule’ governing student loan discharges is GRANTED,” the judges wrote in the decision, which freezes the provisions while the case is under appeal.

The Education Department earlier argued that its revamped borrower defense rule struck the “right balance” between denying meritless claims by student borrowers while making it easier for those who legitimately experienced harm due to misleading recruitment claims and other forms of questionable or illicit activity by schools to receive some sort of compensation.

On the other hand, CCST, which represents over 70 for-profit educational institutions in Texas, argued in court filings that the borrower defense rule—which no longer requires borrowers to prove individualized harm in most circumstances—imposes an unfair burden of cost on educational institutions and that it was part of Mr. Biden’s campaign promise to forgive student debt on a wide scale. …

The rule was initially supposed to go into effect on July 1, with the legal challenge brought by Career Colleges & Schools of Texas (CCST) putting the brakes on implementation.

‘Broad Forgiveness of Student Loans’ With No Avenues for Challenge

The lawsuit filed in February 2023 (pdf) by CCST stems from a rule adopted by the Education Department in November 2022, which implemented the borrower defense statute, giving borrowers new ways to avoid repayment of their federal student loan debt.

Specifically, the borrower defense statute let student borrowers seek relief from their federal student loan debt if they were defrauded or misled by a school. The program provides a process for borrowers to have their federal student loans forgiven in full by the Education Department if they can demonstrate that their school engaged in certain types of deceptive or illegal practices.

However, CCST argued in its complaint that the program was heavily skewed toward borrowers unproven claims, to the detriment of schools. They also noted that the Biden administration had pledged in its election promises to forgive student debt on a large scale. …

CCST also noted that one of the more remarkable parts of the rule was to create a new way of forgiving student loans via a so-called “group process,” basically a form of class action that lacked procedures for schools to challenge it; for instance, as part of the discovery process or individual witness examination.

Calling the rule part of the Biden administration’s “arsenal to pursue broad forgiveness of student loans,” CCST argued in its complaint that the revamped borrower defense rule creates more favorable outcomes for borrowers in group versus individual proceedings and so is “arbitrary and capricious, and violates fundamental principles of due process.” …

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(Excerpt from The Epoch Times. Photo Credit: Chip Somodevilla/Getty Images)

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