Federal court blocks borrower defense rules, says legal challenge will likely succeed

Higher Ed Dive

Ben Unglesbee

April 8, 2024

A federal appellate court blocked the Biden administration’s borrower defense regulations last week, drawing praise from the for-profit industry and criticism from student advocates.

In issuing the injunction, the three-judge panel, all of whom were appointed by Republican presidents, found a “strong likelihood” that a lawsuit brought by Career Colleges and Schools of Texas would succeed against the U.S. Department of Education based on the merits of the case.

Issued by the department in 2022, the regulations were designed to provide loan relief to students who were defrauded by colleges or couldn’t complete their programs because their institutions closed.

The Texas group, an industry organization for for-profits in the state, challenged the rules, arguing that they put colleges on the hook for mass loan forgiveness, and that Congress didn’t give the Education Department the authority to recoup loan forgiveness costs from colleges.

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