Lawsuit Challenges Department of Education's Rejection of Expanded Loan Cancellation

A federal lawsuit filed Wednesday argues that the U.S. Department of Education is illegally ignoring a recent executive order that expanded student loan forgiveness for borrowers from closed colleges. The case was brought by Student Defense, a nonprofit borrower advocacy group, on behalf of Kendrick Gaussoin and potentially thousands of other borrowers. It accuses the Trump administration of refusing to follow the specific rules of the federal closed school discharge program.

Federal law has required education secretaries to cancel debts for qualified borrowers whose schools shut down suddenly for more than 30 years. The Government Accountability Office found that 1,100 colleges closed between 2010 and 2020, leaving 246,000 borrowers eligible for discharge. Standard rules require borrowers to have been enrolled at the time of closure or to have left no more than six months prior. However, an order dated Jan. 6, 2025, signed by then-Undersecretary James Kvaal, widened this window for borrowers from several closed schools, including the Brooks Institute in Ventura, California.

Gaussoin arrived at Brooks in August 2016 to find the doors chained. He had taken an eight-month leave in December 2015 to work as a photographer, placing him outside the standard six-month eligibility window. Under the January 2025 order, anyone enrolled as of May 6, 2015, would have qualified for a discharge and a refund of past payments. Gaussoin applied for relief on Aug. 23, 2026, but received a denial letter dated Aug. 31 that cited the traditional requirements.

Department spokesperson Ellen Keast stated that the Biden administration pursued "unlawful policies" and that the undersecretary "inappropriately" expanded the discharge period days before leaving office. Bonnie Latreille, a former senior official at Federal Student Aid, countered that the secretary legally has the authority to expand the window. She said a top department official told her during the transition not to process discharges under the expanded window without approval from the incoming Trump team. Two other former officials corroborated this account but asked not to be named.

Higher education attorneys not involved in the case told NPR that reversing the change would require a reasoned legal explanation shared publicly. The department did not respond to a request for its legal justification. During the first Trump administration, Education Secretary Betsy DeVos used the same authority in November 2019 to widen the window for students of the Art Institute of Colorado and the Illinois Institute of Art.

Gaussoin, who is now married with two young children and works for an online retailer, owes nearly $22,000 including interest and holds no degree. His mother, Christine Gaussoin, owes about $28,000 on Parent PLUS loans and was also denied a discharge this month. She said the school led her to believe the loans would cover his costs. "The school promised us that this was gonna be his ticket," she said.