The Biden administration has agreed to eliminate the federal student loan debts of approximately 200,000 borrowers who claimed their college defrauded them but who haven't had a response from the Department of Education regarding their applications for years.
Under the proposed agreement, the Biden administration would forgive the debts of borrowers who have already filed a claim against one of 50 colleges and would wipe out over $6 billion of student loan debt if it is approved. The agreement was reached as part of a proposed class-action settlement filed in federal court Wednesday evening, according to Politico.
“Since day one, the Biden-Harris Administration has worked to address longstanding issues relating to the borrower defense process," a statement from the Secretary of Education Miguel Cardona read. "We are pleased to have worked with plaintiffs to reach an agreement that will deliver billions of dollars of automatic relief to approximately 200,000 borrowers and that we believe will resolve plaintiffs’ claims in a manner that is fair and equitable for all parties.”
The settlement comes three years after a 2019 class-action lawsuit challenged the Education Department’s handling of the “borrower defense” law, which entitles federal loan borrowers to debt relief when their college misleads them or otherwise defrauds them. The lawsuit accused the Trump administration, and then the Biden administration, of illegally delaying any action on the applications that borrowers had filed with the Department of Education seeking debt relief for years.
The agreement still needs to be signed off on by a judge, and a hearing has been scheduled for July 28.