Biden's efforts to make it easier for defrauded student-loan borrowers to get debt relief were blocked by a conservative court

• The Fifth Circuit blocked Biden's new rules to ease the debt relief process for defrauded borrowers.
• A for-profit group sued the administration, arguing the rules would harm impacted schools.
• The changes to borrower defense are now blocked as the legal process plays out.

President Joe Biden's efforts to help student-loan borrowers just got dealt another blow in court.

On Monday, a three-judge panel — appointees of former Presidents Ronald Reagan and Donald Trump — in the Fifth Circuit Court of Appeals blocked the Education Department's new rules to make it easier for student-loan borrowers who said they were defrauded by the school they attended to get their debt wiped out.

At the end of June, Career Colleges and Schools of Texas, a for-profit college group, filed a lawsuit against the Education Department to block its latest changes to the borrower defense rules, which allow a borrower who proved they were defrauded to have their loans discharged. The rules would create a more streamlined application process for borrowers seeking debt relief, along with expanding the types of misconduct that would qualify a borrower for a loan discharge.

CCST argued in its original complaint that the department stacked "the deck in favor of borrowers and against schools; the Rule imposes strict liability upon schools for even unintentional erroneous representations or omissions, and then irrationally presumes that every borrower in the group would not have attended the school but for the school's act or omission, whatever it is."

While a district court rejected the group's request for an emergency injunction at the end of June, the Fifth Circuit obliged — blocking the new rule from being carried out for the time being.

The Education Department and CCST did not immediately respond to Insider's request for comment, but Aaron Ament, president of borrower protection group Student Defense, said in a statement that "we cannot afford a green light for dishonest schools to continue harming students." 

"Defrauded borrowers are legally entitled to relief and their institutions should be held accountable," he said. "Until these protections are restored, countless students are at risk of being taken advantage of by higher ed profiteers who are exploiting students with little accountability."

The Education Department said in a July legal filing that "CCST's alleged injuries are entirely speculative and, in any event, insufficient to constitute irreparable injury directly attributable to the Rule. Even if this Court concludes that CCST has adequately established some irreparable injury, that threatened injury plainly could not outweigh the damage that an injunction would cause the public interest."

For now, the department's new rules for borrower defense will be blocked as the legal process proceeds. Jason Altmire, president of Career Education Colleges and Universities — a group that represents for-profit colleges — said in a statement that "knowing that this rule has a strong chance to be struck down during the upcoming legal process, it is unjustifiable to allow its implementation while the court proceedings continue. We are pleased that today's ruling upholds this view."