Borrowers sue federal government over denied student loan cancellations

Kendrick Gaussoin carries nearly $22,000 in student loan debt from a photography degree he did not finish. He works for an online retailer and supports a family, but the cost of his unfinished education at Brooks Institute in California remains a monthly burden. His mother, Christine Gaussoin, owes approximately $28,000 from Parent PLUS loans she took out to support his studies. Both borrowers recently had their applications for debt cancellation rejected by the federal government.

The rejection stems from a conflict over how the Department of Education interprets eligibility rules for closed schools. Federal law requires the secretary to cancel debts for borrowers whose schools shut down suddenly. Standard rules generally require borrowers to have been enrolled or to have left school within six months of the closure. Gaussoin took an eight-month leave of absence in December 2015 to work as a photographer. Brooks Institute closed its doors in August 2016, shortly after he returned, which placed him outside the traditional look-back window.

In January 2025, the Education Department expanded that window under the previous administration. An order signed by Under Secretary James Kvaal on January 6, 2025, stated that borrowers enrolled as of May 6, 2015, at certain closed institutions were eligible for discharge and refunds. The department cited exceptional circumstances at these schools to justify the broader eligibility. This change made Gaussoin eligible for his loans to be erased.

Gaussoin applied for the discharge on August 23, 2026, citing the expanded window. On August 31, 2026, the Trump administration denied his request. The denial letter stated that he did not meet the traditional pre-2025 eligibility requirements. A similar denial was issued to Christine Gaussoin this month. The Department of Education has told NPR it stands by its current implementation of the program.

Student Defense, a nonprofit borrower advocacy group, filed a lawsuit in federal court on Wednesday against the Department of Education. The suit argues that the current administration is illegally refusing to follow the rules established in the 2025 order. Attorneys for the group claim the department cannot simply ignore prior changes made within its legal authority. They contend that if the administration wishes to reverse the expansion, it must provide a reasoned legal explanation to the public.

Bonnie Latreille, a former top official in the office of Federal Student Aid, says the secretary has the authority to expand eligibility windows. She notes that the current administration has raised legal issues by attempting to quietly ignore the 2025 rule change. Latreille recounts that a top department official instructed her team not to process discharges using the expanded window without approval from the incoming Trump team. Two other former department officials confirmed this account to NPR, speaking on condition of anonymity due to fears of professional repercussions.

Education Department spokesperson Ellen Keast responded to the denial by calling the 2025 expansion unlawful. She stated that the former under secretary used a digital pen to inappropriately expand the discharge period for institutions targeted by the previous administration. Keast argued that the policy shifted debt onto taxpayers. The department did not respond to a request to share its specific legal justification for ignoring the prior changes.

Brooks Institute, founded in 1945, was a private, for-profit college that closed in 2016 after years of enrollment declines and complaints about sales tactics. A review by the U.S. Government Accountability Office found that more than 1,100 colleges closed between 2010 and 2020, leaving 246,000 borrowers eligible for discharge. The lawsuit filed by Student Defense may affect thousands of other borrowers who attended similar institutions and were denied relief under the current administration's interpretation of the rules.