US Education Loan Waiver, 200,000 student borrowers to benefit
This settlement will also repair credit histories of 200,000 borrowers that attended certain for-profit schools.
Hundreds of thousands of borrowers from the US Education Department have heaved a sigh of relief after the Department went for a settlement. The Department will forgive 100 per cent of all loan balances besides agreeing to refund prior loan payments. This settlement will also repair the credit histories of 200,000 borrowers that attended certain for-profit schools.
The schools of borrower students were found to be engaged in misconduct by the Department.
Some of the students filed lawsuits demanding cancellation of their loans claiming that their institutions falsely and deceptively promised them high-paying jobs, state of the art vocational training and fulfilling careers.
They held that their lives were worse than before they attended school. They did not get promised jobs and the worst part was their loans were not being cancelled as they had failed in purpose for which they were given. Among the beneficiaries of the settlement will be a large number of international students, including those of South Asian descent.
After three years of litigation, the U.S. Education Department agreed to settle a lawsuit brought against it regarding billions of dollars in debt forgiveness for hundreds of thousands of borrowers.
The terms of the settlement of the lawsuit (Sweet v. Cardona state) means that the Education Department will immediately approve borrower defence claims for approximately 200,000 borrowers, effectively cancelling $6 billion in student loans for students that attended schools that the Department determined engaged in misconduct.
The settlement is divided into two groups: One class consisting of about 200,000 borrowers who took out federal student loans to attend certain schools who will have their loans fully cancelled, receive refunds for prior loan payments and have their credit repaired.
The second class consists of about 64,000 students that took out federal student loans but did not attend a school that figured on the investigated list. These students will have their loan cancellation applications considered and get a decision based on how long their application has been pending.
Secretary of Education Miguel Cardona issued a statement of settlement saying, “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 law suit (Sweet v. Cardona) was brought by seven students against then-Secretary of Education Betsy Devos in 2019, and claimed their loan cancellation applications, known as borrower defence applications, were being ignored by the Education Department.