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Education Dept. to Wipe Out Student Loans of 170,000 More Defrauded Borrowers
The sprawling case, centered on students defrauded by for-profit schools, has now become the largest class-action settlement in American history.
More than 170,000 federal student loan borrowers who said they were defrauded by their schools are set to have $11 billion in debt erased, after an appellate court sided with the borrowers and rejected a request from the Education Department for more time to review their claims.
The decision is the latest grant of mass relief in a class-action suit that was originally filed during President Trump’s first term. The suit centered on federal loans taken out by students who attended dozens of predatory for-profit schools. The government settled the case in 2022, under former President Joseph R. Biden Jr., and forgave the student loan debts of nearly 300,000 borrowers who had become plaintiffs in the class action.
170,000 borrowers to see student loan debt erased
More than 170,000 borrowers will have their student loan debt erased as part of a yearslong class-action battle over about $23 billion in canceled loans.
In the case, filed in 2019, several students applied to the Department of Education for federal student loan relief under the Borrower Defense rule because predatory for-profit schools misled them or defrauded them. Even though the Biden administration reached a settlement in 2022, the Trump administration continued to delay giving the borrowers relief, according to the Project on Predatory Student Lending, which brought the case on behalf of the plaintiffs.
The Education Department's latest attempt to postpone the settlement's schedule of relief for borrowers for 18 months was rejected July 17 by a federal appeals court. That means about $11 billion in loans are set to be forgiven for more than 170,000 borrowers who did not receive timely decisions on their borrower defense applications, Eileen Connor, president and executive director of The Project on Predatory Student Lending, told USA TODAY.
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450,000 defrauded student loan borrowers are eligible for debt forgiveness — here's who qualifies
Hundreds of thousands of student loan borrowers have gotten their debts forgiven, or soon will, due to a $23 billion class-action settlement with the U.S. Department of Education.
The student loan borrower plaintiffs said that their schools significantly misled them and that the Trump administration delayed delivering the relief to which they were entitled under a protection known as Borrower Defense. That program allows defrauded federal student borrowers to get their debt excused.
In late July, a federal appeals court denied Trump officials' latest request to postpone making a decision on a large swath of the applications, paving the way for another nearly 200,000 borrowers to get their student loans wiped. That brings the total number of borrowers to get their debts forgiven under the settlement to about 450,000.
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