Statement Regarding 5th Circuit Ruling on Borrower Defense
“The Fifth Circuit got it exactly backwards. Borrower Defense is a critical protection for student borrowers and has been in place for over thirty years.”
BOSTON — The U.S. Court of Appeals for the Fifth Circuit issued an order maintaining the injunction of the borrower defense rule in the case Career Colleges and Schools of Texas vs Cardona. The case attempts to stop the Department of Education’s 2022 Borrower Defense to Repayment Rule, a critical safeguard allowing student borrowers cheated by their schools to nullify their federal student loans. When that happens, the government can attempt to cover losses from the school in question.
The Project on Predatory Student Lending, along with Public Citizen, filed an amicus brief in the Fifth Circuit, in defense of the Rule. PPSL represents hundreds of thousands of borrowers whose borrower defense applications had been ignored by the Department of Education for years, in the class action lawsuit Sweet v Cardona. In November 2022, the court approved a $6 billion settlement to cancel these fraudulent loans under separate, existing authority. The settlement does not incorporate or rely on the Rule currently challenged by CCST.
Statement from Eileen Connor, President and Executive Director of the Project on Predatory Student Lending:
“The Fifth Circuit got it exactly backwards. Borrower Defense is a critical protection for student borrowers and has been in place for over thirty years. It’s the brazenness of for-profit schools, the scope of their greed, and the willingness of courts to accept their specious complaints that is new and unprecedented.
Career Colleges and Schools of Texas’s ability to block the Department of Education’s updated 2022 rule demonstrates why a strong borrower defense rule is crucial to protect defrauded borrowers and is another troubling sign of a political climate in which people are using the courts to take away people’s legal rights. The scale of the federal student loan program invites abuse, and that is why Congress authorized borrower defense decades ago. Now more than ever it’s important to protect the rights of defrauded borrowers and that is what we will continue to do.”
About the Project on Predatory Student Lending
The Project on Predatory Student Lending (PPSL) is the leading legal organization representing student borrowers against predatory for-profit colleges and the policies that enable institutions to exploit and cheat students. PPSL uses bold, strategic litigation and advocacy to demand accountability in the higher education space and influence policy solutions to create a more just and affordable education system. PPSL represents more than one million student borrowers and its work has resulted in cancellation of more than $16 billion of fraudulent student loan debt.
