$23 Billion Student Loan Relief Approved for Defrauded Borrowers

Thousands of student loan borrowers who were misled or cheated by their colleges are finally receiving long-awaited debt cancellation.

A federal court recently denied a request from the Department of Education to delay student loan forgiveness, clearing the way for automatic relief.

Key Takeaways

• $23 Billion in Total Relief: The landmark settlement covers more than 500,000 borrowers who were defrauded by predatory schools.
• 170,000 More Borrowers Included: The latest court ruling unlocks automatic loan cancellation for an additional 170,000 people.
• Who Is Eligible? Borrowers who submitted a "borrower defense to repayment" claim between June 23, 2022, and November 15, 2022, are affected by this ruling.

Background: How Did We Get Here?

1. The Lawsuit (2019): Borrowers filed a massive class-action lawsuit against the Department of Education, accusing it of ignoring or failing to process applications for loan relief submitted by students who were scammed by their colleges.
2. The Settlement (2022): Under the Biden administration, a legal agreement known as the Sweet v. McMahon settlement was reached to cancel billions in debt for affected students.
3. Recent Court Ruling: After delays and legal pushback, a federal court ruled against further delays by the Department of Education, ordering student loan servicers to move forward with canceling balances.

What Should Borrowers Expect?

Sign of Progress: The advocacy group Project on Predatory Student Lending notes that borrowers may notice their loan balances fluctuating online. This indicates that loan servicers are actively processing the debt discharge.

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