On May 12, 2016, in Salazar v. King, the US Court of Appeals for the Second Circuit held that there was sufficient applicable law to allow judicial review of the Department of Education's (DOE) alleged refusal to suspend collection of student loan debt, and to inform debtors of options to discharge their debt ( (2d. Cir. May 12, 2016).)

The plaintiffs were a group of students at Wilfred American Education Corporation's (Wilfred) for-profit beauty schools. They alleged that Wilfred fraudulently procured student loans on their behalf when it falsely certified that the plaintiffs had an ability to benefit (ATB) from the education they received at Wilfred. The plaintiffs brought a class action lawsuit against the DOE, alleging that the DOE arbitrarily and capriciously refused to temporarily suspend collection of their student loan debt and refused to send them a notice of their potential eligibility for discharge of their debt, in violation of the Administrative Procedure Act (APA).

The plaintiffs moved to certify a class of individuals who obtained federal student loans to attend Wilfred after January 1, 1986, and whose ATB was falsely certified by Wilfred. The district court granted the DOE's motion to dismiss, holding that the plaintiffs had not adequately alleged a final agency action that may be subject to review. The district court also denied the plaintiffs' motion for class certification as moot. The plaintiffs appealed the dismissal. The court of appeals affirmed its jurisdiction within the inherently transitory exception to the mootness doctrine.

The court of appeals reversed the district court's dismissal. As framed by the Second Circuit, the issue presented was whether the statutes and regulations at issue are drawn in such broad terms that "there is no law to apply." Applying the standards of Westchester v. U.S. Dep't of Hous. & Urban Dev., the court reviewed the relevant statutory text, agency regulations, and informal agency guidance (778 F.3d 412, 419 (2d Cir. 2015). Using the guidance provided by DOE regulations and the DOE's Dear Colleague Letters, in the context of the mandatory language of the statute, the court of appeals found that there was sufficient law to evaluate whether the DOE had acted arbitrarily and capriciously and whether there was reliable information to determine eligibility for a discharge of the plaintiff's loans.

The Court noted that this type of evaluation is "squarely within the competence of the judiciary" and remanded the case for further proceedings consistent with the opinion, including consideration of the plaintiffs' class certification motion.