Reported / Citable
Background
The United States sued Arlington Medical Institute Inc. to recover federal student-loan discharges connected to the closure of a school owned by the institute around February 10, 2017. The Department of Education determined that six former students qualified for closed-school loan discharges because they were enrolled when the school closed and did not enroll in another Title IV-eligible school during the following three years.
The government alleged that the institute owed $49,872 in principal, $20,895.53 in administrative fees, and accrued interest and penalties. It served the institute on July 15, 2026, but the institute did not answer or otherwise appear. The clerk entered default on August 6, and the government then moved for default judgment.
The Court’s Holding
The court granted the government’s unopposed motion for default judgment. Applying the Fifth Circuit’s default-judgment factors, it found no disputed material facts, no indication that the institute’s failure to respond resulted from excusable neglect, and prejudice to the government from the institute’s nonappearance.
The court also concluded that the complaint adequately alleged a claim under the Higher Education Act and the Department of Education’s closed-school-discharge regulation. The government was entitled to recover the discharged loan amounts, administrative fees, interest, penalties, and post-judgment interest. But the court did not enter a final monetary award: it ordered the government to submit an affidavit establishing the amount due before final judgment on damages.
Key Takeaways
- A defendant’s complete failure to respond after proper service can support default judgment.
- The government adequately pleaded its right to recover closed-school loan discharges from the former school owner.
- Even after granting default judgment, the court required proof of the amount owed before entering a final damages award.
Why It Matters
The decision illustrates that default establishes liability on well-pleaded facts but does not eliminate the need to substantiate the requested monetary relief. For federal student-loan collection cases, it also confirms the government’s ability to seek reimbursement, fees, interest, and penalties from a closed institution connected to discharged loans.