Borrowers sue over $22,000 debts after Education Dept rejects expanded closure rules

Kendrick Gaussoin owes nearly $22,000 in federal student loans despite working full-time for a decade without a degree. A lawsuit filed in federal court Wednesday by the nonprofit Student Defense claims the Department of Education is unlawfully rejecting loan discharge applications from borrowers like Gaussoin who attended schools that closed suddenly.

Gaussoin attended Brooks Institute, a for-profit college in Ventura, California, which shut its doors in August 2016. His application for closed school discharge was denied on August 31, 2026, just one week after he submitted it. The denial letter cited traditional eligibility rules that require borrowers to have been enrolled or recently left school. However, Gaussoin had taken an eight-month leave of absence in December 2015, placing him outside the standard look-back window under the old regulations.

The legal dispute centers on a policy change implemented in the final days of the Biden administration. On January 6, 2025, then-undersecretary James Kvaal expanded the eligibility window to include any borrower who was enrolled as of May 6, 2015, for several closed institutions including Brooks. The order stated that the schools closed under exceptional circumstances, justifying greater leniency for borrowers. Under this expanded rule, Gaussoin qualifies for loan forgiveness and a refund of past payments.

The Trump administration rejected Gaussoin’s request based on the pre-2025 rules. Education Department spokesperson Ellen Keast said the Biden administration used a digital pen to inappropriately expand the discharge period in its final days. She characterized the prior policy as unlawful, a stance that contrasts with actions taken by the first Trump administration. In November 2019, then-Secretary Betsy DeVos used the same authority to expand the look-back window for borrowers from the Art Institute of Colorado and the Illinois Institute of Art.

Bonnie Latreille, a former top official in the Office of Federal Student Aid, said the secretary has the legal authority to expand the eligibility window. She noted that the current administration has not provided a public legal justification for ignoring the 2025 expansion. Latreille stated that a top department official instructed staff not to process discharges under the new window without approval from the incoming team. Two other former officials corroborated this instruction.

Gaussoin is not alone in his situation. According to a Government Accountability Office review, more than 1,100 colleges closed between 2010 and 2020, leaving 246,000 borrowers eligible for discharge. Gaussoin’s mother, Christine Gaussoin, also owes about $28,000 on Parent PLUS loans. Her application for discharge was also denied this month. The family’s debts have persisted for ten years since Brooks Institute closed, leaving them without a degree and with ongoing financial obligations.

Attorneys for Student Defense argue the administration cannot simply abandon the 2025 changes without a reasoned legal explanation shared with the public. The department did not respond to requests for its specific legal justification for rejecting the expanded eligibility criteria. The suit seeks to have the court rule on whether the current denials comply with federal law.