Department of Education v. Career Colleges and Schools of Texas

In November 2022, the Department of Education issued new regulations that significantly changed how student loan borrowers could get their loans discharged. The rules made it easier for borrowers to have their entire loans forgiven if they could show their school misled them, breached contracts, or engaged in aggressive recruitment. The rules also expanded situations where students could get loans discharged if their school closed. Career Colleges and Schools of Texas (CCST), an association of private postsecondary schools, challenged these regulations.

CCST sued to challenge two major aspects of the Department of Education’s 2022 Rule. First, CCST argued that the borrower defense provisions exceeded the Department's authority by creating new types of claims against the government and schools, and by establishing unauthorized adjudication procedures. Second, CCST challenged the closed school provisions as unlawful because they allowed students to get their loans discharged even without proving the school’s closure prevented them from completing their programs. The district court denied CCST’s motion for a preliminary injunction, finding that CCST had not shown it would suffer irreparable harm. On appeal, the U.S. Court of Appeal for the Fifth Circuit reversed the denial of a preliminary injunction and expanded the injunction to apply nationwide while the appeal continued.