Federal Agency Denies Loan Cancellations It Approved Under Biden Rules, Lawsuit Says

The Department of Education approved loan cancellations for 246,000 borrowers whose colleges shut down between 2010 and 2020, according to the U.S. Government Accountability Office. More than 1,100 schools closed in that period. A lawsuit filed Wednesday in federal court claims the current administration is now refusing to honor that program for some applicants.

Student Defense, a nonprofit borrower advocacy group, filed the case on behalf of Kendrick Gaussoin and potentially thousands of other borrowers. Gaussoin attended Brooks Institute, a private for-profit photography school in Ventura, California. The school's parent company shut its doors in August 2016, ending his degree program and leaving him with loan debt.

Federal law requires the education secretary to cancel the loans of borrowers affected by sudden school closures. Borrowers qualify if they were enrolled when the school closed or left no more than six months before. Gaussoin took an eight-month leave of absence in December 2015 to work as a photographer. That put him outside the six-month window.

In January 2025, the department under then-undersecretary James Kvaal widened the eligibility window to cover borrowers enrolled as of May 6, 2015, for several schools including Brooks. Kvaal wrote at the time that those schools had closed under exceptional circumstances. Gaussoin applied for a discharge on Aug. 23, 2026, citing that expansion. A letter dated Aug. 31 denied his request, telling him he did not meet the older requirements.

Education Department spokesperson Ellen Keast said the Biden-era expansion was unlawful and argued it shifted debt to taxpayers. Bonnie Latreille, a former senior official in the office of Federal Student Aid, said the secretary has authority to widen the window. She also said a department official told her not to process such requests without approval from the incoming Trump team. Two other former officials described the same instruction.

Gaussoin, who works for an online retailer and has two young children, carries nearly $22,000 in student loans with no degree. His mother, Christine Gaussoin, took out Parent PLUS loans and owes about $28,000. Her discharge application was denied this month. The department has not released a legal justification for disregarding the 2025 rule change.

Brooks Institute opened in 1945 and was sold in 1999. After the sale, enrollment fell as borrowers reported high-pressure sales tactics and disputed claims about graduation and job placement rates.