Court Blocks Biden’s Latest Student Loan Scheme

( – A panel of three judges on the Fifth Circuit Court of Appeals has issued the latest setback to the Biden Administration’s plan to cancel large amounts of student loan debt for tens of millions of American borrowers.

On August 7th, the Republican-appointed judges blocked new Department Of Education rules that would allow borrowers to more easily claim they had been defrauded by the institutions they were attending and thus have their debt expunged.

The DOE rules were finalized in June and would permit loan-holders to file a claim if they believe a college lied to them about the nature of the education they would receive or if the school’s conduct violated the law. The claim would then allow the DOE to discharge any loans the student had accumulated in order to attend the institution.

The actions of the Fifth Circuit are part of a temporary injunction and are pending appeal. The ruling was made in response to a February complaint from Career Colleges and Schools of Texas, an organization of 70 institutions across the state that train students for trade careers. In their complaint, the group alleged that the DOE showed favoritism to borrowers.

They said the department’s plan was engineered in a way that would unfairly guarantee the approval of most claims. The complaint also referenced that the DOE’s plan would allow plaintiffs to join class-action suits even if they had not attended the school that was the subject of a particular suit.

The events come shortly after a July 25th announcement from President Biden that he would be canceling $130 million in debt for 7,400 borrowers from a Colorado college that was closed in 2020 following an investigation by the state attorney general.

In August 2022, the Biden administration announced their intention to cancel $430 billion in loans for about 43.5 million individuals, but their plan was struck down by the U.S. Supreme Court.

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