April 5, 2024

Right-Wing Appeals Judges Block Biden Rule Aimed at Cancelling Debts for Students Scammed by Their Colleges

Right-Wing Appeals Judges Block Biden Rule Aimed at Cancelling Debts for Students Scammed by Their Colleges

The New Orleans-based United States Court of Appeals for the 5th Circuit, stacked with right-wing judges and seemingly bent on nullifying a wide range of federal rules, has just taken a hard swing at the Biden administration’s borrower defense rule, a set of regulations aimed at making it possible for students who can show they were deceived by their colleges to have some or all of their student debt cancelled. 

In a decision released Thursday, a three-judge panel of the appeals court found that an association of Texas for-profit colleges had shown they have a strong likelihood of proving they will prevail in their lawsuit challenging the rule. The court concluded that the Biden borrower defense regulations will create “uncertainty, complexity and potentially huge liability for the association’s members” and “upends thirty years of regulatory practice.”

The appeals court therefore ordered a federal trial judge in the western district of Texas to issue a preliminary injunction blocking the rule pending further proceedings in the case. That judge had denied the schools’ motion for the injunction, ruling that the schools had failed to show they would face irreparable harm without an injunction in advance of a final ruling on the merits.  The appeals court disagreed. 

The appellate panel wrote, “The unbridled scope of these prohibitions enables the department to hold schools liable for conduct that it defines only with future ‘guidance’ documents or in the course of adjudication. Simply put, the statute does not permit the department to terrify first and clarify later.”

The Biden rule replaced a rule issued under Donald Trump and Betsy DeVos that made it virtually impossible for ripped-off students to gain debt cancellation, even though a federal statute passed by Congress contemplates such relief.

The three 5th Circuit judges joining Thursday’s opinion are Edith Jones, appointed by Ronald Reagan, and Donald Trump appointees Cory Wilson and Kyle Duncan.

The for-profit college industry also has filed two lawsuits against the Department of Education in the northern district of Texas federal court, seeking to strike down the Biden administration’s version of the gainful employment rule, a measure which would place at risk the eligibility for federal aid of for-profit and career training programs that consistently leave students with more debt than they can afford to repay. The Biden rule, again, replaced a Trump rule that left the Department of Education powerless to use federal statutory language aimed at protecting students against predatory schools. The lawyers in one of two gainful employment cases have filed a motion seeking a preliminary injunction.