Lawsuit: Trump Administration Illegally Denying Student Debt Relief to Borrowers of Closed Schools

A new lawsuit accuses the Trump administration of illegally denying student loan debt relief to thousands of borrowers whose colleges shut down. The suit claims the Department of Education is failing to use its authority to automatically discharge loans for students affected by school closures, as required by federal regulations. Borrowers who attended now-defunct institutions like Corinthian Colleges and ITT Technical Institute are among those allegedly left in limbo, with many still owing debts for degrees they could not complete. The legal action, filed by a borrower advocacy group and a former student, argues that the department's inaction violates the Higher Education Act, which mandates loan forgiveness when a school closes before a student can finish their program. The case highlights a broader struggle over student debt relief policies, with the administration previously moving to restrict borrower defenses to repayment. If successful, the lawsuit could force the department to process pending claims and provide relief to affected borrowers, potentially setting a precedent for future school closures.