Career Colleges & Schools of Texas v. U.S. Department of Education

Under the Higher Education Act, student loan borrowers who can show that the school they attended engaged in certain wrongful acts or omissions have a defense against repayment of their federal student loan debt through a process known as “borrower defense” to repayment. The borrower defense process is particularly important in light of revelations that some for-profit colleges and universities have misled and deceived vulnerable students, persuading, sometimes coercing, them to take out federal student loans to attend programs that provided minimal educational value.

In November 2022, the Department of Education finalized its rule implementing the borrower defense statute. Five months later, in April 2023, Career Colleges & Schools of Texas (CCST) filed a lawsuit challenging the rule and moved for a preliminary injunction against implementation of the rule. The district court denied the motion, and CCST appealed to the Fifth Circuit. On appeal, Public Citizen and the Project on Predatory Student Lending at Harvard Law School filed an amicus brief in support of the Department. The brief explained that many of the provisions challenged by CCST reflect the Department’s consistent interpretation of the borrower defense statute over three decades and that the plain meaning of the statutory text supports the availability of borrower defense relief based on affirmative claims.

In April 2024, the Fifth Circuit reversed the district court’s decision and directed it to issue the requested preliminary injunction on remand, holding that the plaintiffs were likely to prevail on the merits of their claims.