Estimated reading time: 8 minutes.
Key facts
- The case: Gaussoin v. McMahon, No. 1:26-cv-03784, U.S. District Court for the District of Columbia, filed October 28, 2026.
- Who sued: Kendrick Gaussoin, a former Brooks Institute student from Winsted, Connecticut, for himself and a proposed class of borrowers, represented by the National Student Legal Defense Network.
- Who was sued: the U.S. Department of Education and Education Secretary Linda McMahon, in her official role.
- The claim: the Department approved wider closed school loan discharges in January 2025 for students of certain for-profit chains and Bay State College, then never carried them out.
- Schools named: campuses of Career Education Corporation, Education Corporation of America and Education Management Corporation, plus Bay State College.
- What it seeks: a court order making the Department grant the discharges, notify borrowers and stop collecting on covered loans. It does not seek money damages.
In this article
- What closed school discharge is
- What the Department decided in January 2025
- What the lawsuit says happened next
- The borrower behind the case
- Who is in the proposed class
- What the lawsuit asks the court to order
- What the Education Department says
- What borrowers can do now
- What happens next
- Frequently asked questions
When a college shuts down, students who borrowed federal loans to attend can be left with debt and no degree. A new class action says the Education Department promised relief to borrowers from several closed for-profit chains in January 2025 and then never delivered it. NPR reported that the case was brought on behalf of potentially thousands of borrowers.
What closed school discharge is
A closed school discharge cancels federal student loans taken out to attend a school that closed while the student was enrolled or shortly after the student left. Congress created the benefit in the Higher Education Act, and Education Department rules set the details.
- Look-back window: students qualify if they withdrew within a set period before the closure. According to the complaint, the rules have used 90 days for loans from 1994 to 2014, 120 days after that, and 180 days for loans first disbursed on or after July 1, 2020.
- Exceptional circumstances: the rules let the Department stretch the look-back window when a school's decline started long before its doors closed, such as when it lost accreditation or announced it was shutting campuses.
- What a discharge does: cancels the remaining balance, refunds payments already made on the loan, removes any default, corrects credit reporting, and restores eligibility for federal student aid, according to the complaint.
This is a federal loan case, not a payout The lawsuit asks a judge to make the Education Department apply relief it already approved. If it succeeds, eligible borrowers would have loans canceled and past payments refunded through the Department. There is no settlement fund and no claim form tied to this case.
What the Department decided in January 2025
On January 16, 2025, days before the change of administration, the Department announced that several closed schools met the exceptional circumstances standard. The complaint calls this the "2025 Decision." It extended the look-back windows to these dates:
| School owner | Schools affected | Extended look-back date |
|---|---|---|
| Career Education Corporation (CEC) | Le Cordon Bleu, Brooks Institute, Missouri College, Briarcliffe College, Sanford-Brown and others | May 6, 2015 |
| Education Corporation of America (ECA) | Virginia College, Brightwood College, EcoTech, Golf Academies | December 16, 2016 |
| Education Management Corporation (EDMC) | Art Institutes, including Miami International University of Art & Design, and Argosy University | October 17, 2017 |
| Bay State College | Bay State College, a Massachusetts school that closed in August 2023 | April 23, 2021 |
The Department said most borrowers would need to apply, but it directed Federal Student Aid, the office that runs federal loans, to tell borrowers they were eligible. It also directed automatic discharges for borrowers whose schools closed between 2013 and 2020 and who did not enroll at another school within three years.
NPR reported that the decision was based on an order signed January 6, 2025 by James Kvaal, then the under secretary of education.
What the lawsuit says happened next
The complaint says the Department has "unlawfully rescinded, abandoned, or refused to implement" the 2025 Decision "without any explanation, public notice, or justification." On information and belief, meaning based on what the plaintiffs have been able to learn so far, it alleges that:
- The Department has not granted a single discharge under the extended windows since January 2025.
- Borrowers were never told they might qualify.
- Loan servicers, the private companies that manage federal loans for the government, were not told to apply the new dates.
NPR reported that Bonnie Latreille, a former Federal Student Aid official, said a top department official told her during the transition not to process discharges under the expanded windows without approval from the incoming administration. Two other former officials corroborated her account to NPR without being named.
The complaint brings two class claims under the Administrative Procedure Act (APA), the federal law that lets courts review agency action. The first says the Department unlawfully withheld or unreasonably delayed action it was required to take. The second says the Department effectively abandoned the 2025 Decision without the reasoned explanation the law requires. A third claim challenges the denial of Gaussoin's own application.
Why this case matters If a court agrees that the 2025 Decision is binding, the Department would have to apply it to every eligible borrower, not just those who sue. NPR, citing a Government Accountability Office report, said more than 1,100 colleges closed from 2010 to 2020 and about 246,000 borrowers became eligible for closed school discharges.
The borrower behind the case
The complaint says Gaussoin enrolled at Brooks Institute, a for-profit CEC school in Ventura, California that offered photography, film and visual journalism programs, around September 2, 2014, and paid for it with federal Direct Loans. He took an approved leave after the fall 2015 term to gain work experience, and his last day of attendance was December 17, 2015. When he returned in August 2016 to re-enroll, he learned the school was closing. Brooks closed on August 19, 2016.
Under the normal window, he left too early to qualify. Under the 2025 Decision's May 6, 2015 date for CEC schools, he would qualify, according to the complaint. He applied on August 23, 2026. The Department, acting through its servicer, the Missouri Higher Education Loan Authority (MOHELA), denied the application on August 31, 2026, saying he had withdrawn more than 180 days before the closure. The complaint says the denial did not mention the 2025 Decision, and that even the stated window was wrong because a 120-day window applies to his loans.
NPR reported that Gaussoin owes nearly $22,000 including interest. His mother, Christine Gaussoin, took out Parent PLUS loans for his education and owes about $28,000. NPR said her closed school discharge application was also denied this month.
Who is in the proposed class
The complaint proposes a class of all federal student loan borrowers who (1) attended, or borrowed for a student who attended, a school covered by an extended window in the 2025 Decision, (2) withdrew without finishing on or after the start of that window, and (3) have not received a closed school discharge for those loans. That includes parents with Parent PLUS loans. The complaint says the covered chains and Bay State enrolled tens of thousands of students during those periods. A class action lets one or more people sue on behalf of a larger group with the same claim. This class is brought under Rule 23(b)(2), which covers cases seeking court orders that apply to the whole group rather than individual damages.
A proposed class has no legal effect unless the judge certifies it.
What the lawsuit asks the court to order
- Certify the class and declare the Department's failure to act unlawful.
- Set aside the Department's abandonment of the 2025 Decision.
- Order the Department to instruct servicers to apply the extended windows and stop collecting on covered loans.
- Order the Department to notify affected borrowers.
- Require status reports to the court.
- Send Gaussoin's denial back to the Department for a new decision.
- Award attorneys' fees and costs.
What the Education Department says
The Department told NPR it stands by its implementation of the program. Spokesperson Ellen Keast said in a statement: "Literally days before leaving office, the former Biden Under Secretary used the stroke of a (digital) pen to inappropriately expand the closed-school discharge period for certain institutions targeted by the previous Administration."
NPR noted that in November 2019, during the first Trump administration, Education Secretary Betsy DeVos used the same exceptional circumstances authority to extend the window for students of the Art Institute of Colorado and the Illinois Institute of Art. The Department did not share its legal justification with NPR. It has not yet filed a response in court. Federal rules generally give U.S. agencies 60 days after service to answer a complaint.
What borrowers can do now
If you attended one of the listed schools during the extended window and did not finish your program, you can apply for a closed school discharge through StudentAid.gov. Gaussoin's application specifically pointed to the extended window, according to the complaint.
What to keep on file Save your enrollment dates, the last date you attended, loan statements, your discharge application and any denial letter. Parents who borrowed Parent PLUS loans for a student at a covered school fall within the proposed class too.
For other cases accepting people now, see our list of class action cases you can join.
This article is for information only and is not legal advice.
What happens next
The Department will respond to the complaint, and the plaintiffs are expected to ask the court to certify the class. The court could also be asked to decide the case on the administrative record without a trial, which is common in APA cases. We will update this story as the case moves forward.
Frequently asked questions
What is the closed school discharge lawsuit about?
A former Brooks Institute student says the Education Department approved expanded loan cancellation for students of certain closed schools in January 2025, then never applied it.
Which schools are covered by the 2025 closed school decision?
Campuses owned by Career Education Corporation, Education Corporation of America and Education Management Corporation, including Le Cordon Bleu, Brooks Institute, Virginia College, Brightwood College, the Art Institutes and Argosy University, plus Bay State College.
Do I need to join the class action?
No. It seeks relief for the whole group, and there is no sign-up. A proposed class only exists if the judge certifies it.
Will this lawsuit pay me money?
Not directly. If it succeeds, eligible borrowers would get loans canceled and past payments refunded through the Department, not a settlement check.
Can I still apply for closed school discharge?
Yes. Borrowers can apply through StudentAid.gov. The complaint says Gaussoin's application, which cited the extended window, was denied without mentioning it.
Who filed the case?
Kendrick Gaussoin, represented by the National Student Legal Defense Network, also called Student Defense, a nonprofit borrower advocacy group.
