The Supreme Court has rejected a request to postpone the forgiveness of billions of dollars worth of student loan as part of a historic settlement agreement.
The decision favors the debtors and gives the Biden administration the go-ahead to keep administering the relief provided by the accord.
Student Loan Cancellation Lawsuits Continue
In Sweet v. Cardona, a long-running class action against the Education Department during the Trump administration over rejected or denied Borrower Defense,
The Borrower Defense program may forgive federal student debt if a borrower’s institution misrepresented or lied about key aspects of their education.
According to the agreement, for roughly 300,000 borrowers who attended specifically covered institutions and submitted a Borrower Defense application by last summer, the Biden administration will automatically offer $6 billion in student loan forgiveness.
By an accelerated evaluation of Borrower Defense applications, many more borrowers may ultimately receive student debt cancellation.
Three institutions that were mentioned in the settlement agreement, however, contested the decision, claiming the terms were unjust and that their inclusion as covered institutions would damage their reputations.
The schools requested a delay in the settlement relief’s execution while they filed an appeal. Schools filed an appeal with the Supreme Court after the trial court rejected their motion.
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A Win for Borrowers and a Blow to For-Profit Colleges
Last week, the Supreme Court declined to overturn the dismissal of a class-action case brought by student loan borrowers who claimed their institutions had cheated them.
Today, the $6 billion loan forgiveness deal can be carried out in full by the U.S. Department of Education.
The settlement encompassed more than 150 schools, largely for-profit organizations.
Everglades College Inc., American National University, and Lincoln Educational Services Inc. were three of the organizations that had petitioned the supreme court.
They claim that the payment violates their right to due process and damages their reputation.
A request for comment was not immediately answered by Career Education Colleges and Universities, a trade body that represents for-profit universities.
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