Supreme Court Declined to Block $6 Billion Student Loan Settlement

Supreme Court Declined to Block $6 Billion Student Loan Settlement – A class action lawsuit alleging fraud by educational institutions was settled last week when the Supreme Court declined to stop the deal. The U.S. Department of Education can fully implement the $6 billion debt forgiveness settlement.

More than 150 schools were included in the settlement, and almost all were for-profit.

Lincoln Educational Services Corp., American National University, and Everglades College Inc. were the three that approached the Supreme Court with their requests. They claim that the payment damages their reputation and that they were denied due process.

Consumer advocates applauded the justices’ decision.

Eileen Connor, president and director of the Project on Predatory Student Lending, stated, “Today’s swift and decisive action from the highest court should end, once and for all, any ongoing debate about the legitimacy of this settlement.”

When asked for comment, the trade group representing for-profit universities, Career Education Colleges and Universities, did not respond immediately.

Here’s the lowdown on the compromise that’ll affect the debtors.

Relief is a result of class-action lawsuit by borrowers

Around 2015, students began flooding the U.S. Department of Education with requests to cancel their student loans because their schools deceived them.

If a borrower’s school is judged to have committed misconduct, the federal government can forgive the borrower’s federal student loan obligation.

In 2019, a group of borrowers seeking to expedite their applications filed a class action lawsuit against the agency.

Years of litigation ensued, with the Trump administration eventually sending denial notices to approximately 128,000 borrowers.

However, by June of 2022, a compromise had been struck between the borrowers and the government. It provided debt relief to tens of thousands of borrowers who qualified under its criteria. These pupils went to one of the 151 schools accused of wrongdoing.

The government has promised to review the requests of thousands of other borrowers and issue a decision within a specified period.

The settlement will remain in effect after the Supreme Court’s ruling last week.

Eligible borrowers will get refunds, and debt erased.

A list of the participating institutions is included in the settlement as “Exhibit C.” All colleges that are a part of the Project on Predatory Lending are included. Borrowers were represented in the case by the project.

Higher education expert Mark Kantrowitz believes that a borrower who attended one of these schools and applies for a borrower defense debt discharge on or before June 22, 2022, should be granted automatic relief.

Kantrowitz said they should be eligible today even if their application had been turned down.

Those eligible for automatic relief can expect to have their debt canceled by January 28, 2024, at the latest.

Some debtors may receive monetary compensation and have their debts canceled as part of the settlement.

Kantrowitz confirmed that “this will include a refund of all payments previously made.”

As part of the settlement, the review process for borrower defense applications filed by borrowers who attended institutions not included on the list will be simplified and accelerated.

A case unrelated to Biden’s student loan forgiveness

The Supreme Court is debating the Biden administration’s ambitious plan to forgive up to $400 billion in student debt; a ruling is likely in June.

The class action lawsuit filed by allegedly duped borrowers is unrelated to that policy.

Related CTN News:

Biden’s Student Loan Forgiveness Application Has Been Launched – 5 Tips Before You Submit

Biden’s Student Loan Forgiveness Application But First, A Few Things For Applicants

Biden’s Student Loan Forgiveness Could Help More Than 40 Million