Background
Plaintiffs are a certified class of federal student loan borrowers seeking loan forgiveness under the Higher Education Act based on fraudulent misconduct by their educational institutions. They filed a class action under the Administrative Procedure Act alleging the Department of Education failed to adjudicate their borrower defense applications. The parties entered a Settlement Agreement requiring the Department to adjudicate applications of Post-Class Applicants by January twenty-eighth, two thousand and twenty-six. The Department moved for relief under Federal Rule of Civil Procedure sixty-one b to extend this deadline, but the district court denied the motion.
The court’s reasoning
The panel applied the four factors from Nken versus Holder regarding a stay pending appeal. The court found the Department failed to demonstrate a strong likelihood of success because it could not show that the district courts clearly abused their discretion in refusing to modify the Settlement Agreement under Federal Rule of Civil Procedure sixty-one b. The court noted that the Department knew the size of the applicant group over three years prior and pointed to no changed circumstances rendering the agreement inequitable. The remaining factors were not sufficiently strong to outweigh the Department’s weak showing on the merits.
What it means going forward
The denial of the stay means the Department of Education must adhere to the original January twenty-eighth, two thousand and twenty-six deadline to adjudicate Post-Class Applicant applications or provide full settlement relief to those applicants.