United States President Joe Biden's administration has reached a deal this week to cancel $6 billion worth of student loan debt among 200,000 borrowers who attended mostly for-profit colleges, a move that received support from the Education Department.
The agreement covers more than 150 different schools across the country, including DeVry University, the University of Phoenix, and the recently defunct ITT Technical Institute. Under the deal, another 68,000 borrowers who did not attend eligible colleges will have their applications for relief fast-tracked.
Student Loan Debt Forgiveness
Originally, the lawsuit was filed in 2019 and argued that the Department of Education intentionally stalled the borrower defense process. It is how people apply for relief if they believe a college they attended made false advertising claims.
The director of the Project on Predatory Student Lending, Eileen Connor, who represented the plaintiffs, celebrated the "momentous proposed settlement" on Thursday. In a statement, she said that the deal 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, as per Fox Business.
A hearing for a judge to give the final sign-off on the deal is scheduled for July 28 and it comes weeks after the Biden administration announced that it would cancel roughly $5.8 billion in debt for anyone who attended a Corinthian school.
The progressive wing of the Democratic Party has, since the first days of Biden's presidency, been pushing the president to cancel $50,000 of student loan debt for each borrower. So far, Biden has resisted those calls but reports last month noted that the White House was considering canceling up to $10,000 in student loan debt for each borrower.
According to CNBC, the plaintiffs brought their lawsuit against the Trump administration in 2019, representing roughly 264,000 class members who said that their applications for loan cancellation were being ignored by the Education Department.
Schools Involved in Misconduct
The project compiled a list of the dozens of schools that are involved in the settlement and that the Education Department has determined engaged in misconduct. Secretary of Education Miguel Cardona said in a statement that the Biden administration has always been working to address long-standing issues relating to the borrower defense process.
The Biden administration previously approved $25 billion in loan forgiveness for 1.3 million borrowers in the country. The decision was made when roughly 43 million Americans have federal student loan debt.
The majority of the borrowers affected by the new agreement have been waiting for several years for the Education Department to process their claims under a rule known as borrower defense to repayment. The process allows borrowers who believe they were misled by their universities, often overinflated job placement rates or the ability to transfer credits, to request federal student loan relief.
No more than a year after the date that the agreement formally goes into effect, roughly 200,000 borrowers will automatically get full debt relief. The deal comes as the Biden administration also temporarily expanded eligibility for what is known as the Public Service Loan Forgiveness, CNN reported.
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