A federal court denied the Department of Education's request to delay student-debt relief, allowing for an additional 170,000 borrowers defrauded by their schools to receive debt cancellation under the Sweet vs. McMahon settlement, totaling $23 billion for over 500,000 borrowers.
This decision provides significant financial relief to hundreds of thousands of student-loan borrowers who were victims of predatory practices, potentially impacting their ability to manage debt and improve their financial standing.
Thousands of student-loan borrowers who were defrauded by their schools are set to receive long-awaited debt cancellation following a federal court's decision to deny the Department of Education's request for a delay. This ruling allows for an additional 170,000 borrowers to receive relief under the Sweet vs. McMahon settlement, bringing the total debt cancellation to $23 billion for over 500,000 individuals.
The settlement, reached in 2022, addresses claims from borrowers who alleged they were defrauded by their educational institutions. While some borrowers have already received relief in batches, many have been waiting for their applications to be processed. The Project on Predatory Student Lending (PPSL), which represents borrowers in the case, hailed the court's decision, calling the settlement the largest class-action settlement in American history.
Eileen Connor, president and executive director of PPSL, stated, "To anyone out there struggling with predatory student debt, we see you. And to anyone out there looking to exploit students, we see you too." Borrowers who submitted claims between June 23 and November 15, 2022, are impacted by this latest ruling. Some of these borrowers have already observed changes in their loan balances, which is typically an indicator that their loan servicers are processing the debt discharge.
This development occurs as the Education Department navigates other significant student-loan repayment changes and legal challenges, including lawsuits concerning new borrowing caps for advanced degrees and the transition of borrowers to the SAVE income-driven repayment plan.