The Biden Administration has agreed to help approximately 200,000 borrowers who claimed to be defrauded by for-profit schools, but whose applications for relief have been denied. The new agreement is likely to wipe out more than $6 billion of student loan debt after a settlement was reached in a class-action court case. Here’s what you need to know.
Who qualifies for this round of student loan forgiveness?
According to Politico, a proposed settlement has been reached in a long-running lawsuit against the Education Department. The case accused the department of misuse of the “borrower defense” law which outlines an entitlement of debt relief when a college is found to have misled students or defrauded students.
The lawsuit, called Sweet v. Cardona, was first brought up during the Trump administration and followed while Biden took office, and it involved 264,000 people who accused the Education Department “of illegally delaying for years any action on the applications that borrowers had filed with the Education Department seeking debt relief.”
The agreement will see approximately 200,000 borrowers have their debt wiped out, totaling around $6 billion all tied to dozens of schools that have been accused of defrauding students. However, with this agreement, there will still be around one-quarter of pending claims remaining to be decided upon.
“The remaining claims — from about 68,000 borrowers — will have to be decided individually by the Education Department,” Politico explains. “The Biden administration agreed as part of the deal to resolve those remaining claims within six months to 30 months, depending on how long the application has been pending.”
While an agreement has been reached, it still needs to be approved by a judge before the Biden administration can forgive the loan debts.
The project compiled a list of the dozens of schools that are involved in the settlement and that the Education Department has determined engaged in misconduct. To find out if your student loans may be involved in the latest debt cancelation, Project on Predatory Student Lending has compiled a list of dozens of schools involved in the settlement.
What’s next for student loan forgiveness?
President Biden promised to cancel student debt on the campaign trail. While he has taken significant actions to do so for specific groups, like defrauded students, students unable to work, and those who were wrongfully denied forgiveness through public service loan forgiveness programs, he’s reportedly still working on a larger plan to cancel student debt.
The last update was that the plan to forgive student loans would include some form of income cap — rumored to be set at $150,000 for single-filers — and would be capped at $10,000 per person. Student experts say that is not enough to help borrowers significantly.
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