Adam M Minsky
May 1, 2023
The Biden administration is sending out a new batch of emails to borrowers potentially eligible for student loan forgiveness under a recent class action settlement. The Supreme Court just rejected a challenge to that settlement, allowing the Education Department to move forward in implementing the student debt relief.
Here’s what borrowers should know.
$6 Billion In Student Loan Forgiveness Under Borrower Defense Settlement
The settlement agreement resolves Sweet v. Cardona, a years-long class action lawsuit brought by student loan borrowers over the Borrower Defense to Repayment program. That program can provide debt relief — including student loan forgiveness — for borrowers who were misled or defrauded by their school. The class of borrowers who filed the suit (originally against the Trump administration) had argued that the Education Department illegally delayed hundreds of thousands of application decisions, and arbitrarily denied other applications without adequate review.
The approved resolution of the suit would provide $6 billion in student loan forgiveness, as well as payment refunds and some credit report improvements for covered borrowers. Hundreds of thousands of borrowers who attended one of dozens of institutions approved under the agreement will qualify. The Supreme Court rejected a legal challenge last month seeking to halt the relief, paving the way for the Education Department to proceed.
Education Department Notifies Post-Class Applicants Of Settlement Process
Borrowers who submitted Borrower Defense to Repayment applications by June 22, 2022 and attended one of the approved schools are part of the “automatic discharge” group. Under the Sweet v. Cardona settlement, these borrowers are entitled to student loan forgiveness for their applicable federal student loans automatically. The Education Department has already notified most of these borrowers of their eligibility, and relief will be implemented throughout the remainder of this year.