Another 200,000 student borrowers are on the brink of getting full relief after being defrauded by for-profit colleges. The Biden administration agreed to settle a long-running class action lawsuit seeking to get the Education Department to take action on “borrower defense” applications. If approved by a judge, the settlement will wipe another $6 billion in student loan debt—a huge amount of money that is nonetheless a tiny fragment of the more than $1.7 trillion of total student loan debt burdening around 45 million people.
“If your school misled you or engaged in other misconduct in violation of certain state laws, you may be eligible for ‘borrower defense to loan repayment,’” according to StudentAid.gov, which means “the discharge of some or all of your federal student loan debt.” The lawsuit charged that the Trump administration—and then the Biden administration—delayed taking action on these applications for relief. Now, that action will finally come.
RELATED STORY: Biden administration to forgive $5.8 billion in debt for students defrauded by Corinthian Colleges
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The lawsuit was brought by Harvard Law School’s Project on Predatory Student Lending. Eileen Connor, director of the project, said the proposed settlement “will deliver answers and certainty to borrowers who have fought long and hard for a fair resolution of their borrower defense claims after being cheated by their schools and ignored or even rejected by their government.”
“It will not only help secure billions of dollars in debt cancellation for defrauded students, but charts a borrower defense process that is fair, just, and efficient for future borrowers,” she added in a statement.
In addition to the 200,000 people who will get full debt relief, another 68,000 will be guaranteed (relatively) prompt individual attention from the Education Department, which will decide on their claims in as few as six or as many as 30 months.
This proposed settlement, which affects former students at 50 mostly for-profit colleges and universities, follows the Biden administration’s decision to forgive $5.8 billion in debt for students defrauded by Corinthian Colleges, a for-profit chain that went bankrupt in 2015. The Biden administration has also revamped the Public Service Loan Forgiveness program, introduced fixes to income-driven repayment, and extended relief to people with disabilities. But President Joe Biden continues to dither about whether to do universal loan forgiveness, and if so, how much to forgive, with reports saying he will forgive $10,000 per student with income caps. That would wipe out student debt for about one in three borrowers, but a much smaller percentage of those who owe more than they originally borrowed 12 years after starting college—a group that is disproportionately Black.
The Biden administration’s moves on student debt have been life-changing for those they’ve affected. But tens of millions of people’s lives remain shaped by their student debt, which limits their choices and in many cases grows rather than shrinks as they pay month after month. That is the essential problem Biden needs to address. So far, he’s falling short.
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