Federal Court Suit Challenges Trump Education Department's Reversal of Loan Discharge Policy

A federal lawsuit filed Wednesday argues that the Trump administration is unlawfully disregarding a recent expansion to student loan discharge rules. The suit, brought by the nonprofit Student Defense, claims the Department of Education is ignoring a 2025 order that widened eligibility for borrowers from closed institutions. The case centers on the government's refusal to process loans for students who attended schools that shut down before the standard lookback period expired.

The dispute involves a specific regulatory change made by the Biden administration in the days before it left office. An order signed by then-Undersecretary James Kvaal on January 6, 2025, expanded the eligibility window for borrowers who had enrolled at certain closed schools by May 6, 2015. The order cited exceptional circumstances as the reason for the change. This adjustment made thousands of borrowers eligible for discharge and refunds of past payments. The current administration has denied several applications based on the older, narrower rules.

The lead plaintiff in the suit is Kendrick Gaussoin, a former student at Brooks Institute in Ventura, California. Gaussoin attended the for-profit photography school before it closed in August 2016. He had taken an eight-month leave of absence in December 2015 to work as a photographer. Because the school closed while he was away, he fell outside the traditional six-month lookback window required for discharge. Under the 2025 rule, he became eligible. He applied for discharge on August 23, 2026, but the department denied his request in a letter dated August 31, 2026.

Department of Education spokesperson Ellen Keast defended the denial in a statement. Keast said the Biden administration implemented unlawful policies to shift debt onto taxpayers. She described the undersecretary’s expansion as an inappropriate use of authority made in the final days of the term. The department has not shared a legal justification for ignoring the 2025 order. It stands by its current implementation of the program, according to a reply to NPR.

The department’s position contrasts with its actions during the first Trump administration. In November 2019, Secretary Betsy DeVos used the same legal authority to expand the lookback window for borrowers from the Art Institute of Colorado and the Illinois Institute of Art. DeVos cited exceptional circumstances and stated that students deserved to be made whole. Bonnie Latreille, a former top official in the office of Federal Student Aid, says the secretary has the legal power to expand the window. She argues that ignoring the 2025 rule raises legal flags.

Latreille says a top department official instructed her not to process discharges under the expanded window without approval from the incoming Trump team. Two other former officials corroborated this account. They spoke on the condition of anonymity due to fears of professional repercussions. Attorneys for Student Defense argue the administration cannot simply abandon the 2025 changes. Higher education attorneys not involved in the case note that reversing such changes requires a reasoned legal explanation shared with the public.

Brooks Institute closed after years of financial trouble and declining enrollment. Founded in 1945, the school sold in 1999 and later faced accusations of misleading students about costs and job placement rates. Gaussoin’s mother, Christine Gaussoin, took out Parent PLUS loans to help pay for his education. She believed the school’s assurance that the loans would cover his costs. The plan was for Kendrick to remain debt-free. That plan failed when the school requested more money.

Christine Gaussoin was living on disability while recovering from knee surgery. Her son asked her to write a letter stating he was no longer her dependent so he could take out federal loans. She now owes approximately $28,000 in debt. Her own application for discharge was denied this month. Kendrick Gaussoin is married with two children and works for an online retailer. He carries nearly $22,000 in student loan debt, including interest, but did not receive a degree.

Gaussoin says he has been trying to survive on minimum wage. He notes the difficulty of managing debt without the credential he was seeking. Christine Gaussoin says she regrets believing the school’s promises. The Gaussoins are among an estimated 246,000 borrowers who were eligible for discharge from closed schools between 2010 and 2020, according to a Government Accountability Office review. More than 1,100 colleges closed during that decade.