WASHINGTON — A nonprofit that represents student borrowers went to federal court Wednesday, accusing the U.S. Department of Education of refusing to honor an expanded loan-forgiveness window for people whose colleges shut their doors before they could finish.
The group, Student Defense, filed the case on behalf of a former photography student at the for-profit Brooks Institute in Ventura, Calif., and potentially thousands of other borrowers in the same position. Brooks closed in August 2016.
For more than 30 years, federal law has directed the education secretary to cancel the federal loans of qualified borrowers whose schools close. Normally that relief covers only students who were enrolled when the school shut down or who left a short time before. The Government Accountability Office puts those usual cutoffs at 90, 120 or 180 days, with the length set by the date the loan was disbursed, and the secretary can stretch them in exceptional circumstances.
In January 2025, in the final days of the Biden administration, the department used that power for several shuttered campuses once owned by Career Education Corporation, Brooks among them. Anyone enrolled as of May 6, 2015, became eligible to have the debt wiped out and past payments refunded. The department also directed its Federal Student Aid office to alert eligible borrowers and to seek automatic discharges for some whose schools closed between 2013 and 2020 and who never enrolled elsewhere within three years.
The lawsuit says the current administration is ignoring that expansion. The student at the center of the case applied in late August under the wider window and was turned down about a week later in a letter that applied only the older, standard rules. His mother, who took out Parent PLUS loans for his schooling, was also denied this month.
The department has defended its handling of the program and called the Biden-era expansion an improper, last-minute move. Lawyers for the borrowers argue the earlier decision was well within the agency’s legal authority and cannot simply be set aside without a reasoned, public explanation. The first Trump administration used the same tool in 2019, when then-Education Secretary Betsy DeVos extended the window for former students of two Art Institute campuses in Colorado and Illinois.
The stakes are broad. Federal auditors found that about 246,000 borrowers attended the more than 1,100 colleges that closed from 2010 through 2020, and 43% of borrowers hit by those closures never finished their programs or transferred to another school.
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