The Biden administration is forgiving the federal student debt of borrowers who say their schools cheated them, settling a class-action lawsuit originally filed against the Trump administration.
“We are pleased to have worked with the plaintiffs to reach a settlement that will bring billions of dollars in automatic relief to approximately 200,000 borrowers and which we believe will resolve the plaintiffs’ claims in a fair and equitable manner for all parties will,” Education Minister Miguel Cardona said in a statement Thursday.
Plaintiffs in the case, Sweet v. DeVos (now Sweet v. Cardona), had filed “borrower defense” motions to cancel their federal student loan debt for misconduct by their schools. They sued the Department of Education four years ago, in 2018, because it stopped making decisions on borrower defense applications. The lawsuit questioned the way the Department of Education handled those applications, citing “delays in issuing final decisions” under former Secretary of Education Betsy DeVos and the “rejection of certain applications beginning in December 2019.”
According to rights organization Project on Predatory Student Lending, as part of the settlement, the Department of Education will “revoke all denial notices it issued between December 2019 and October 2020.”
The settlement says the administration will service those borrowers’ student loan debts and reimburse all relevant payments to the Department of Education to settle those debts — including debts that have been paid off in full.
Earlier this month, the Biden administration announcedwould automatically have theirs to end one of the most notorious fraud cases in American higher education.
Under the new promotion, everyone who participated in the now-defunct chain from its inception in 1995 to its collapse in 2015 will have their federal student debt paid off. It will forgive $5.8 billion in debt for more than 560,000 borrowers, in what the agency says is the largest single loan relief in the Department of Education’s history.
As of December, the Department of Education had more than 109,000 applications pending from students alleging fraud by their colleges, according to the Associated Press.
Sarah Ewall-Wice and Associated Press contributed to this report.