The Biden administration has agreed to cancel an estimated $6 billion in federal student loan debt for about 200,000 borrowers who have claimed they were defrauded by their college.
The administration had previously approved $25 billion in loan forgiveness for 1.3 million borrowers. Around 43 million Americans have federal student loan debt.
More than 150 institutions are covered by the agreement, including DeVry University, the University of Phoenix, and the recently shut down ITT Technical Institute.
Under the terms of the agreement, the petitions for relief of an additional 68,000 borrowers who did not attend universities that qualified will be expedited.
Many of the borrowers who will be impacted by the new deal have been waiting years for the Department of Education to process their claims in accordance with a law known as the “borrower defense to repayment.”
It enables borrowers to apply for federal student loan relief if they feel their college misled them, frequently by overstating job placement rates or the ability to transfer courses.
The case was initially filed in 2019, and it claimed that the Department of Education had purposefully slowed down the borrower defense procedure, which is how people can petition for relief if they think a college they attended made misleading statements in its advertising.
The “momentous proposed settlement” was praised on Thursday by Eileen Connor, the head of the Project on Predatory Student Lending, which represented the plaintiffs.
She added in a statement, “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.”
If you don’t ask, you don’t get. Demanding compensation wins again
“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”https://t.co/LaO6mUQWwr
— Dr4#OurNHS #SocialistAlliance #SocialistSunday (@Dr4OurNHS) June 23, 2022
On July 28, a judge will hold a hearing to grant the agreement his or her final approval.