Closed School Discharge Program Lawsuit: Borrowers Say the Education Department Is Ignoring the Expanded Window That Made Them Eligible
A class action filed Wednesday says the department has not granted a single discharge under its January 2025 decision widening eligibility for students of closed colleges - including a Brooks Institute photographer who was denied in August under the old, narrower rules.
The search phrase is a lawsuit, and the lawsuit is about a promise. Student Defense, a nonprofit borrower advocacy group, filed a class action on Wednesday against the Department of Education and Secretary Linda McMahon, alleging the department is illegally refusing to fully apply the closed school discharge program - the process, required in federal law for more than three decades, under which the secretary must cancel the loans of qualified borrowers whose schools close suddenly. The suit, reported by NPR and The College Investor, was filed on behalf of Kendrick Gaussoin and potentially thousands of other borrowers.
The dispute is over a window. Traditionally, a borrower qualifies if they were enrolled when the school closed or left no more than six months before. In an order dated January 6, 2025, then-Undersecretary James Kvaal expanded that look-back window for several closed schools under 'exceptional circumstances': for schools run by Career Education Corporation, including Brooks Institute, anyone enrolled as of May 6, 2015 became eligible for a discharge and a refund of past payments. The January 2025 decision also set extended dates for Education Corporation of America schools (December 16, 2016), Education Management Corporation schools (October 17, 2017) and Bay State College (April 23, 2021). The lawsuit alleges the department has 'not granted a single closed school discharge pursuant to the 2025 Decision,' and claims the refusal violates the Administrative Procedure Act; it asks the court to certify a class, order the department to implement the decision and notify eligible borrowers, stop collections on class members' loans, and overturn Gaussoin's denial. Those are the filing's claims, carried here as allegations.
Gaussoin's own file is the test case. He enrolled at Brooks Institute in Ventura, California, in 2014 to study photography; the school closed in August 2016 while he was on an approved leave that began in December 2015 - his last day of attendance was December 17, 2015 - which put him outside the traditional window but inside the expanded May 2015 date. He applied on August 23, 2026, citing the expansion; eight days later the department's servicer denied him in a letter that judged him against the older requirements and never mentioned the 2025 decision. He owes nearly $22,000 including interest and has no degree; his mother Christine owes about $28,000 in Parent PLUS loans for his schooling, and her discharge application was also denied this month.
The department defends its course in its own words. Spokesperson Ellen Keast told NPR: 'The Biden Administration was laser-focused on implementing unlawful policies to shift student loan debt onto the back of every single hardworking American taxpayer. Literally days before leaving office, the former Biden Under Secretary used the stroke of a (digital) pen to inappropriately expand the closed-school discharge period for certain institutions targeted by the previous Administration.' Former Federal Student Aid official Bonnie Latreille told NPR the secretary does have the legal authority to expand the window, and that quietly ignoring the change 'raises legal flags' - and NPR noted the first Trump administration's Secretary Betsy DeVos used the same authority in 2019 to expand the window for two Art Institutes. The scale behind the case is large: a Government Accountability Office review found more than 1,100 colleges closed from 2010 through 2020, leaving about 246,000 borrowers eligible for a discharge, of whom only about 80,000 had loans forgiven.
