Borrowers sue Education Department over denied loan discharge after school closures

Student Defense filed a federal lawsuit on Wednesday to force the Department of Education to honor a 2025 rule change that expands loan forgiveness for borrowers whose schools closed. The suit names Kendrick Gaussoin and potentially thousands of other borrowers as plaintiffs. It argues that the Trump administration is illegally refusing to apply the expanded eligibility criteria.

The dispute centers on the closed school discharge program. Federal law has required the education secretary to cancel debts for borrowers at suddenly closed schools for over 30 years. A Government Accountability Office review found that more than 1,100 colleges closed between 2010 and 2020. This left 246,000 borrowers eligible for some form of relief.

Gaussoin attended Brooks Institute in Ventura, Calif., a private for-profit photography school. The institution shut down in August 2016. He had taken an eight-month leave of absence in December 2015 to work as a photographer. Under standard rules, borrowers must have been enrolled or left within six months of closure to qualify. Gaussoin’s absence placed him outside that window. He has carried nearly $22,000 in student loan debt without earning a degree since then.

The eligibility landscape changed in late 2024. In an order dated Jan. 6, 2025, then-undersecretary James Kvaal expanded the look-back period for borrowers at several closed schools, including Brooks. The new rule allowed any borrower enrolled as of May 6, 2015, to qualify for discharge and a refund of past payments. The department cited exceptional circumstances for the change.

Gaussoin learned of the new rule this summer. He applied for a closed school discharge on Aug. 23, 2026, citing his eligibility under the expanded window. On Aug. 31, the department denied his request. The denial letter stated that he did not meet the traditional pre-2025 eligibility requirements.

Department spokesperson Ellen Keast defended the denial in a statement to NPR. She called the Biden-era expansion unlawful and said the former administration shifted debt onto taxpayers. Keast noted that the change was made days before the administration left office.

The current administration’s stance contrasts with actions taken by the first Trump administration. In November 2019, Education Secretary Betsy DeVos used the same legal authority to expand the look-back window for borrowers at the Art Institute of Colorado and the Illinois Institute of Art. DeVos said at the time that students deserved to be made whole and that the extension would help them complete their education.

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 window. She noted that a top department official instructed her not to process discharges under the new rules without approval from the incoming Trump team. Two other former officials corroborated this account. They asked for anonymity due to fears of professional repercussions.

The Gaussoin family has felt the financial strain for a decade. Christine Gaussoin, Kendrick’s mother, took out Parent PLUS loans to help pay for his education. She owes about $28,000. Her application for a closed school discharge was also denied this month. Both parents work in retail and cite the debt as a barrier to financial stability.

Attorneys for Student Defense argue that the administration cannot simply ignore the 2025 changes. Multiple higher education attorneys said the department must provide a reasoned legal explanation to the public if it seeks to reverse the rule. The department did not respond to a request to share its legal justification for ignoring the expansion.