If you borrowed money to attend a for-profit college and are part of the 200,000 people to have filed a borrower defense repayment claim with the Education Department, get ready to say goodbye to your student loan debt.
The department said Thursday it agreed to forgive $6 billion worth of federal student loans for 200,000 borrowers, settling a class-action lawsuit brought against it by people who took out loans to attend for-profit colleges which they said misled them.
If you’re part of this group, you will have your student loan balance canceled and the money you’ve already paid will be refunded, with your credit report cleared of any delinquencies, according to the terms of the settlement in the Sweet v. Cardona case, which has yet to be approved by a federal court. A hearing on whether to grant preliminary approval or not is scheduled for July 28.
The settlement applies to you if you took out federal student loans to attend the Art Institutes, Salter College, Brooks Institute of Photography, and a host of other institutions, and you filed borrower defense to loan repayment claims, arguing your loans should be forgiven because you were misled by the institution you attended. The suit was originally filed in 2019 and accused the Trump administration and then-Education Secretary Betsy DeVos of failing to act on the claims. If you haven’t yet filed a claim, you can still do so and have your claim considered.
“This momentous proposed settlement will deliver answers and certainty to borrowers who have fought long and hard for a fair resolution of their borrower defense claims after being cheated by their schools and ignored or even rejected by their government,” Eileen Connor, director of the Project on Predatory Student Lending, the legal aid group representing the borrowers, said in a statement.
Have a question, comment, or story to share? You can reach Diccon Hyatt at email@example.com.
Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!