Appeals court halts new Biden rules on debt relief for defrauded students

The future of the Biden administration’s rules to ease the path to student loan forgiveness for people who were defrauded borrowers by their college or whose schools abruptly close is in doubt.

On Monday, the U.S. Court of Appeals for the 5th Circuit issued an injunction to prevent the government from implementing regulations that took effect last month while it considers a lawsuit brought by Career Colleges and Schools of Texas, which represents 70 for-profit colleges. The court will hear the case on Nov. 6.

The Education Department said it is reviewing the order and “won’t back down in our efforts to take on predatory colleges, provide relief to borrowers who have been cheated or had their school close, and hold institutions accountable for deceptive schemes.”

The career college association sued the department in February to block a rule updating regulations that govern the discharge of federal student loans when borrowers are defrauded by their colleges, permanently disabled, spend years in public service or face a school closure. The changes are some of the most significant updates to the federal student loan repayment system in years.