Defendant: U.S. Department of Education (federal program, not litigation) | Category: Education & Student Loans | Added: 2026-07-08
Alleged Issue
Standing federal discharge program for borrowers whose school engaged in misconduct that violated certain laws related to their federal student loan, primarily affecting students of for-profit schools.
Eligibility
Borrowers who believe their school misled them or engaged in misconduct connected to their federal student loan; apply directly through the program.
Estimated Payout
Full or partial discharge of the federal student loan balance, varies by case
Claim Deadline
None
Background
The legal basis for this program is Section 455(h) of the Higher Education Act of 1965, which authorizes the Secretary of Education to define which acts or omissions by a school can be asserted as a defense against repaying a federal Direct Loan. The Department first wrote rules implementing this in 1995, then substantially expanded them in 2016 after a major national school chain's 2015 bankruptcy revealed how poorly the original rule handled a mass wave of claims; the standards were revised again for loans disbursed on or after July 1, 2020, and again by a 2023 rulemaking. The Department can grant relief either by reviewing an individual borrower's application or, when it determines a school engaged in widespread misconduct, through a 'group discharge' that can cover everyone who attended during the affected period even without an individual application. As of April 2024, the Government Accountability Office reported the Department had discharged a cumulative $17.2 billion in loans for nearly 975,000 borrowers under this program.