Federal Lawsuit: Education Department Ignores Expanded Loan Forgiveness Rules

Student Defense filed a lawsuit in federal court on Wednesday against the U.S. Department of Education, claiming the agency is unlawfully refusing to honor expanded student loan forgiveness rules for borrowers whose schools closed.

The suit was filed on behalf of Kendrick Gaussoin and potentially thousands of other borrowers. Between 2010 and 2020, more than 1,100 colleges closed, leaving 246,000 borrowers eligible for discharge, according to a review by the U.S. Government Accountability Office. The legal action challenges the department's current interpretation of these eligibility requirements.

Gaussoin attended the Brooks Institute in Ventura, Calif., which shut down in August 2016. He had taken an eight-month leave of absence in December 2015 to work as a photographer, placing him outside the standard six-month look-back window for traditional discharge. However, in an order dated January 6, 2025, then-Undersecretary James Kvaal expanded the eligibility window for borrowers at certain closed schools, including Brooks. Under that change, anyone enrolled as of May 6, 2015, qualified for loan cancellation and a refund of past payments.

Gaussoin applied for this discharge on August 23, 2026, citing the expanded window. The department denied the request in a letter dated August 31, 2026, stating he did not meet the pre-Biden eligibility requirements. Spokesperson Ellen Keast said the former administration used "unlawful policies" to shift debt to taxpayers. She noted that the expansion occurred literally days before the administration left office.

Bonnie Latreille, a former top official in the Office of Federal Student Aid during the Biden administration, said the secretary has the legal authority to expand the eligibility window. She stated that if the Trump administration is ignoring the rule change, it raises legal flags. Latreille said a top department official instructed her not to process discharges using the expanded window without approval from the incoming team. Two other former officials corroborated this account but requested anonymity due to professional concerns.

Gaussoin now owes nearly $22,000 in student loan debt, including interest, despite having no degree. His mother, Christine Gaussoin, owes about $28,000 from Parent PLUS loans and was also denied a discharge this month. The department did not respond to a request to share its legal justification for ignoring the earlier changes. Attorneys for Student Defense argue the administration must build a reasoned, legal explanation to reverse the previous rules rather than simply abandoning them.

The lawsuit marks a renewed legal fight over how the government manages debt for students from closed institutions. The department told NPR it stands by its implementation of the program. The case will determine whether the expanded eligibility window remains in effect for the thousands of borrowers affected by recent school closures.