Federal court approves $6 billion in student loan forgiveness for defrauded borrowers

who claimed their institutions had cheated them received final approval from a federal judge in San Francisco on Wednesday.

This differs from the general federal student loan forgiveness program being argued in court at the moment. These borrowers were part of a class action lawsuit against 153 mostly for-profit colleges that are accused of defrauding students in some way such as exaggerating post-graduate job prospects or/and salaries. The borrower defense rule allows this particular sub-group of borrowers to seek relief and even total forgiveness of their loans.

The lawsuit, Sweet v. Cardona was originally Sweet v. DeVos as the lawsuit was brought during Former President Trump’s presidency when Betsy DeVos was the U.S. Secretary of Education. The borrowers were arguing that the DeVos led Department of Education was refusing to address their claims.

The opposition to the settlement was made up of for-profit colleges who argue that most of these claims have never been investigated individually.

Though technically speaking current U.S. Secretary of Education, Miguel Cardona is the subject of the lawsuit, he was happy with the outcome of the ruling:

“We are pleased with yesterday’s borrower defense court decision approving the settlement which will provide billions of dollars of relief to over 200,000 borrowers,” said Cardona. “It will also resolve plaintiffs’ claims in a fair and equitable manner. Going forward, the Department of Education will continue to strengthen oversight and enforcement for colleges that mislead students and work to uphold the Biden-Harris Administration’s commitment to helping students who have been harmed.”

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