The U.S. Department of Education agreed to
About 200,000 borrowers will be immediately eligible for relief under the
“This momentous proposed settlement will deliver answers and certainty to borrowers who have fought long and hard for a fair resolution of their borrower defense claims after being cheated by their schools and ignored or even rejected by their government,” Eileen Connor, the director of the Project on Predatory Student Lending, said in a statement, adding that the landmark settlement “charts a borrower defense process that is fair, just, and efficient for future borrowers.”
The organization created a
Millions of students took out federal loans from for-profit colleges including ITT Technical Institute, the Art Institute, DeVry University, Brooks Institute and more that made false promises about the job prospects of students who graduated from the institutions. Between 2015 and 2019, thousands of individuals made borrower defense claims with the Department of Education requesting that the loans be canceled due to the schools’ misconduct.
In June 2019, named plaintiffs filed a class action lawsuit against the Trump administration on behalf of themselves and 264,000 individuals who claimed the Department of Education “unlawfully withheld and unreasonably delayed” decisions on borrower defense applications under former Secretary Betsy DeVos.
Approximately 200,000 students who attended colleges on a list under the terms of the Sweet settlement will get automatic relief. The remaining 64,000 who attended institutions not listed under the settlement will have their borrower defense applications reviewed on a rolling deadline. If the Education Department fails to make a decision by these deadlines, the borrower will automatically receive relief.
“Since day one, the Biden-Harris Administration has worked to address longstanding issues relating to the borrower defense process,” Secretary of Education Miguel Cardona said in a
The decision comes as President Biden faces immense pressure to follow through on a campaign promise to provide some student loan relief as more students have taken on more debt to pay for the rising costs of higher education.
Biden is considering
— With assistance from Ella Ceron and Claire Ballentine.