District Court denies preliminary injunction; Department of Education’s Borrower Defense Regulations take effect

Courts Student Lending Department of Education

On October 17, the U.S. District Court for the District of Columbia denied plaintiff California Association of Private Postsecondary Schools’ request for preliminary injunction to enjoin the implementation and enforcement of several provisions of the Department of Education’s Final Regulations (81 FR 75926) (also known as the “Borrower Defense Regulations” or “regulations”). The Borrower Defense Regulations—finalized in 2016 and originally set to take effect July 1, 2017—are designed to protect student borrowers against misleading and predatory practices by postsecondary institutions and clarify a process for loan forgiveness in cases of institutional misconduct. (See previous InfoBytes coverage here.) Under the regulations, the Department is required to create a “clear, fair, and transparent” process for handling borrowers’ loan discharge requests and to automatically forgive the loans of some students at schools that closed, without requiring borrowers to apply for that relief. However, according to the court, because the Department stayed the effective date of the majority of the regulations pending resolution of the case, the plaintiff’s motion was never fully briefed or decided. After hearing oral arguments, the court concluded that the plaintiff “failed to carry its burden of demonstrating that any one of its members is likely to suffer an irreparable injury in the absence of an injunction.” Moreover, the court stated that it was “not convinced that the [plaintiff] has shown a ‘substantial likelihood’ that it has standing to sue.”

Per the court’s decision, the Borrower Defense Regulations became effective immediately. As previously covered by InfoBytes, the court sided with a coalition of state Attorneys General last month, ruling that the Department’s decision to delay the regulations was procedurally invalid, but delayed implementation of the regulations pending a decision in the plaintiff’s lawsuit.