Education Department Fails to Axe $92 Million Credit Letter Suit

US Bank Trust Co. and Education Creditor Trust can continue to seek compensation for the US Department of Education’s alleged breached a letter of credit used to satisfy federal school funding agreements, a federal court said.

The plaintiffs, who seek $92 million, plausibly alleged that the department breached an agreement with the operator of post-secondary schools by improperly drawing on the letter of credit, and that the plaintiffs are successors-in interest to that operator, Judge Eric G. Bruggink of the US Court of Federal Claims said. His Thursday opinion partially denied the government’s motion to dismiss.

The dispute involves the ...