U.S. Federal Court of Appeals Halts Biden Administration’s Rule Aimed at Assisting Defrauded Students with Debt Relief

The U.S. Federal Court of Appeals has intervened in the ongoing battle over student debt relief.

U.S. Federal Court of Appeals Blocks Biden Administration’s Student Debt Relief Rule

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The U.S. Federal Court of Appeals has sided with a consortium of Texas-based for-profit colleges and universities, effectively blocking a recently instituted rule by the Biden administration that aimed to streamline debt relief processes for students who had been defrauded by their educational institutions. This U.S. Federal Court of Appeals ruling marks a setback for the administration’s persistent efforts to provide much-needed relief to borrowers grappling with the escalating costs of higher education. The legal saga began when the Career Colleges and Schools of Texas, representing over 70 for-profit educational institutions, filed a lawsuit on the U.S. Federal Court of Appeals against the Biden administration in February, challenging the legality and scope of the new rule known as the Borrower Defense to Repayment Rule. The association labeled the rule as an “enormous executive overreach” with objectives that seemingly aimed at achieving “massive loan forgiveness for borrowers” while shifting the financial responsibility to the higher education institutions and the U.S. Federal Court of Appeals. Seeking an injunction, the trade union had approached a district court prior to the U.S. Federal Court of Appeals rule’s July 1 implementation, but their request was denied on the grounds that the regulation posed no immediate irreparable harm to its member institutions.

Texas For-Profit Colleges Win Legal Battle Against Biden’s Education Rule, U.S. Federal Court of Appeals Rules

Biden’s Student Debt Relief Initiative Halted by U.S. Federal Court of Appeals (PHOTO: Element5 Digital)

Undeterred, the trade union escalated the case by appealing the district court’s decision in late June, leading to the recent verdict by a conservative three-judge panel within the U.S. Federal Court of Appeals for the Western District of Texas. The court did not provide explicit reasons for its decision to grant the injunction, but its ruling sets the stage for hearings to commence on November 6. Notably, all three judges on the panel were appointed by past Republican presidents. The Biden administration has vigorously defended the rule before the U.S. Federal Court of Appeals, asserting that potential harms predicted by the Career Colleges and Schools of Texas were “entirely speculative” and did not qualify as irreparable injury attributable to the rule. The Department of Education emphasized that both Congress and the Department had recognized the importance of enabling debt relief for students who had suffered due to their schools’ misconduct.

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