Student-loan forgiveness is finally here for thousands of borrowers.
A federal court denied the Department of Education’s request to delay student-debt relief for borrowers entitled to relief under the Sweet vs. McMahon settlement. The settlement has allowed for $23 billion in relief for over 500,000 borrowers defrauded by their schools.
It was reached in 2022 under the Biden administration, and while batches of borrowers have received relief, thousands more have been waiting. The court’s latest decision led to automatic relief for an additional 170,000 borrowers, according to the Project on Predatory Student Lending, an advocacy group representing borrowers in this case.
Student-loan borrowers filed a case against the Department of Education in 2019, accusing the department of failing to process their borrower defense to repayment applications. Those are claims borrowers can submit if they believe they were defrauded by their school. If approved, their student debt from attending that school would be wiped out.
In a Thursday press release, the Project on Predatory Student Lending called it “the largest class-action settlement in American history.”
“The work isn’t over: To anyone out there struggling with predatory student debt, we see you,” said Eileen Connor, president and executive director of PPSL. “And to anyone out there looking to exploit students, we see you too.”
Student-loan borrowers who submitted claims for relief between June 23 and November 15, 2022, are affected by the appeals court ruling. PPSL said that some of those borrowers have started to see their balance fluctuate, which “is a good sign” and typically means that servicers are working to process the discharge.
The decision comes as the Education Department is working to implement sweeping student-loan repayment changes — and navigating other legal challenges. Advocacy groups have filed lawsuits against the department challenging its new borrowing caps for advanced degrees, in addition to a separate lawsuit pushing to stop the forced transition of borrowers of the SAVE income-driven repayment plan.
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