Thousands of student-loan borrowers whose schools shut down have been illegally denied debt relief, a new lawsuit says

A new lawsuit said the Department of Education is failing to process student-debt relief for thousands of borrowers. Kevin Carter/Getty Images

Student-loan borrowers whose schools shut down are not getting the debt relief they're owed, a new lawsuit said.

On Wednesday, advocacy group Student Defense filed a class-action lawsuit on behalf of Kendrick Gaussoin, a borrower who took out student loans to attend the Brooks Institute. The visual arts college shut down in 2016 due to financial distress and new regulation on for-profit colleges; Gaussoin was left with student debt but no degree.

A mechanism called a "closed school discharge" allows borrowers whose schools shut down to receive debt relief.…