Thousands of student-loan borrowers whose schools shut down have been illegally denied debt relief, a new lawsuit says
A new lawsuit said the Trump administration is failing to use its authority to process student-debt relief for borrowers whose colleges closed.
A class-action lawsuit alleges the Department of Education is unlawfully denying student-loan relief to thousands of borrowers whose schools closed down, according to advocacy group Student Defense. The lawsuit, filed on behalf of Kendrick Gaussoin, a graduate of the now-defunct Brooks Institute, asserts the department is not processing relief for borrowers who qualify under a 2025 decision that extended the timeframe for closed school discharges.
Gaussoin, who took out loans to attend the visual arts college in 2016 before it shut down due to financial distress, remains burdened with debt despite qualifying for relief. The lawsuit contends the Education Department has not adhered to the expanded relief timeframe, leaving eligible borrowers to continue making payments and risk default consequences like wage garnishment and the loss of federal benefits.
Student Defense's vice president, Alexander Elson, emphasized the injustice, stating, "Thousands of borrowers are entitled to discharges under the Department's 2025 Decision, and we are going to court to make sure they receive them." The lawsuit highlights the ongoing controversy surrounding student-loan relief, with past lawsuits targeting defrauded borrowers and those benefiting from a Biden-era repayment plan, although the department has denied any wrongdoing.
Gaussoin, now a father of two and deep in debt, expressed his frustration, stating, "I qualify, but my application was denied anyway."
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