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Biden administration agrees to cancel student debt of 200K borrowers who say they were defrauded

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The Biden administration has agreed to fully discharge the federal student loan debts of approximately 200,000 borrowers who claimed they were defrauded by their college but whose applications for relief have languished at the Education Department for years.

The agreement, which could wipe out more than $6 billion of student loan debt, was reached as part of a proposed class-action settlement filed in federal court Wednesday evening.

The proposed settlement is a possible ending chapter to a long-running lawsuit challenging the Education Department’s handling of the “borrower defense” law, which entitles federal loan borrowers to debt relief when their college misleads them or otherwise defrauds them.

The class-action lawsuit accused the Trump administration — and then the Biden administration — of illegally delaying for years any action on the applications that borrowers had filed with the Education Department seeking debt relief.

Under the proposed agreement, which still needs to be approved by a judge, the Biden administration would forgive the student loan debts of hundreds of thousands of borrowers who have already filed a claim against one of 50 colleges, most of them for-profit institutions. Those borrowers would also receive a refund of payments they already made under the agreement.

Approximately 74,000 of the borrowers are........

© Politico

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