Government writes off $6 billion in student loan debt

The US Department of Education has agreed to write off $6 billion in student loan debt, a move that affects about 200,000 federal borrowers. The borrowers had filed a class action lawsuit against the federal agency, claiming they were obligated to repay the debt of the schools that had misled them.

Key points to remember

  • The federal government has decided to write off about $6 billion in student loan debt to settle a class action lawsuit involving about 264,000 borrowers.
  • In the lawsuit, the borrowers alleged they should have been forgiven because their schools misled them. The settlement also includes refunds and credit repair.
  • The lawsuit was originally filed in 2019 against the Trump administration and then Education Secretary Betsy DeVos.

Biden administration settles student debt class action lawsuit

Sweetv. Cardona is a class action lawsuit filed in 2019 – it was originally about Sweet v. DeVos before former Secretary of Education Betsy DeVos was replaced by Miguel Cardona – on behalf of more than 264,000 student borrowers.

This list includes all federal borrowers who were denied discharge under the Borrower Repayment Defense Program between December 2019 and October 2020.

The program states that if a school misleads a borrower or engages in other misconduct that violates certain state laws, that borrower may be eligible for a full discharge of their student debt.

The lawsuit plaintiff compiled a list of dozens of colleges and universities that engaged in such misconduct, according to the federal agency, and were included in the lawsuit.

After three years, the Biden administration agreed to settle the lawsuit, providing about $6 billion in discharges to about 200,000 borrowers, along with refunds of amounts paid and credit repair for those who missed payments. Additionally, a second group of 64,000 borrowers will get decisions on their release applications in rolling timelines based on how long their applications are pending.

All loans will remain in forbearance and out of collection status with no accrued interest until they have received promised relief or received a final, appealable denial. If you submit an application for the Borrower Defense Program until repayment after the settlement date, June 22, 2022, you will not be part of the lawsuit, but you will get a decision within 36 months depending on the property – based on your request. If you do not receive a decision by then, you will receive an automatic pardon.

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