Borrowers sue over closed school loan denials

Kendrick Gaussoin faces a $22,000 student loan bill without a degree after his college closed a decade ago. A new federal lawsuit filed Wednesday in Los Angeles claims the Department of Education is illegally denying his request for loan forgiveness.

Student Defense, a nonprofit borrower advocacy group, filed the suit on behalf of Gaussoin and potentially thousands of other borrowers. The lawsuit targets the Trump administration's refusal to apply expanded eligibility rules established in early 2025 for students from closed for-profit institutions.

Gaussoin enrolled at Brooks Institute in Ventura, California, to study photography. The private school shut down in August 2016 after its parent company closed its doors. At the time, Gaussoin was on an eight-month leave of absence to work. This gap placed him outside the standard six-month look-back window required for a traditional closed school discharge under federal law.

In January 2025, then-Undersecretary James Kvaal signed an order expanding the eligibility window. The order allowed any borrower enrolled as of May 6, 2015, to qualify for discharge and a refund of past payments. Kvaal cited exceptional circumstances surrounding the closures as the reason for the change.

Gaussoin applied for the discharge on August 23, 2026, citing the new rules. On August 31, the department denied his request. The denial letter stated he did not meet the traditional pre-2025 eligibility requirements. Education Department spokesperson Ellen Keast told NPR the Biden administration used unlawful policies to shift debt to taxpayers. She described the final-day expansion as inappropriate for institutions targeted by the previous administration.

Former Federal Student Aid official Bonnie Latreille said a top department official instructed staff to hold off on processing discharges under the expanded window without approval from the incoming Trump team. Two other former officials confirmed this account. Latreille argued that if the current administration wants to reverse the changes, it must provide a reasoned legal explanation to the public.

The Department of Education did not respond to a request for its legal justification for ignoring the 2025 changes. Gaussoin's mother, Christine Gaussoin, also owes approximately $28,000 in Parent PLUS loans from the same period. Her application was also denied this month.

Between 2010 and 2020, more than 1,100 colleges closed, leaving 246,000 borrowers eligible for some form of discharge according to a Government Accountability Office review. The lawsuit seeks to force the department to process applications under the expanded criteria established in 2025.