Court Approves $6B Student Loan Settlement
On Wednesday, a US federal judge granted final approval of a settlement that will lead to an estimated $6B in student loan forgiveness for over 200k allegedly defrauded student-loan borrowers. The agreement was initially approved by the Education Dept. in June.
Facts
- On Wednesday, a US federal judge granted final approval of a settlement that will lead to an estimated $6B in student loan forgiveness for over 200k allegedly defrauded student-loan borrowers. The agreement was initially approved by the Education Dept. in June.
- The lawsuit, Sweet v. Cardona, was filed in 2019 by student-loan borrowers who accused the Education Dept. of failing to process or arbitrarily denying their student loan forgiveness applications under the Borrower Defense to Repayment.
- Borrower's Defense allows federal student loan borrowers to ask the Education Dept. to erase their debts if a school has lied to them about their job prospects, credit transferability, or likely salary after graduation.
- As part of the settlement, the Education Department identified 153 institutions, many of which are for-profit colleges, as having evidence of “substantial misconduct … whether credibly alleged or in some instances proven.”
- The agreement will also see an additional 64k students who didn't attend any of the listed schools receive decisions on the applications based on a rolling deadline and require decisions be made within three years for any borrower who filed an application after June 22.
Sources: Forbes, Business Insider, NPR Online News, and Washington Post.
Narratives
- Democratic narrative, as provided by The Washington Post. The finalization of this settlement is a victory for Americans overburdened by student debt. Finally, borrowers defrauded by universities will get the loan forgiveness they're entitled to, and the mountainous backlog of debt relief claims will be addressed. This is a clear win.
- Republican narrative, as provided by Forbes. Biden has given the Education Dept. a reckless blank check to write off billions of dollars of debt without Congressional approval. A large percentage of debt is held by doctors, lawyers, and other well-paid professionals. This settlement is unfair to the American taxpayers who are footing the bill and the schools that are deemed guilty without due process.
