An administrative law judge, Robert Layton, has temporarily blocked the U.S. Department of Education from recouping more than $23 million in discharged student loans from DeVry University, a for-profit college.
This decision was in response to DeVry’s request to pause the recoupment, which the Education Department had initiated under the borrower defense to repayment regulation, allowing loan cancellation for students defrauded by their colleges. Layton’s order cited a legal challenge against the department’s newest version of these regulations, temporarily preventing them from taking effect. The Education Department has sought reconsideration of the decision, emphasizing that the pause on the recoupment does not affect other potential recoupment actions.
The recoupment dispute arose from the Education Department’s 2022 decision to clear up to $71.7 million in student loans for individuals who had made borrower defense claims against DeVry. This marked a significant change in the department’s approach, as it was the first time the agency had provided such relief to students who attended an institution that remained open and received Title IV federal financial aid. DeVry had sued the Education Department over the recoupment attempt, arguing that the department had unlawfully established an administrative scheme to adjudicate borrower defense cases and recoupment claims, which it deemed unconstitutional..