Student borrowers reached a settlement with the US Department of Education last month that will forgive about $6 billion in student loans on a group of more than 200,000 people if approved by a federal judge.

Seven students first filed a lawsuit against the US Department of Education under Betsy DeVos in June 2019, when the department stopped processing borrower defense claims. In October 2019, U.S. District Judge William H. Alsup certified a class of more than 200,000 student borrowers seeking relief from some or all of their federal student loan debt who claim their school misled them or acted illegally.

Plaintiffs in the case are represented by attorneys from the Project on Predatory Student Lending at Harvard Law School’s Legal Services Center — which seeks to represent students against for-profit colleges — and economic and housing rights advocates at California-based nonprofit.

On July 28, the court will hold a first hearing to decide whether or not to approve the settlement. If the court grants preliminary approval, the Ministry of Education will notify class members, who can then comment on the settlement agreement. After considering the comments, the court will hold a final hearing in the fall of 2022.

Eileen Connor, director of the Predatory Student Loans Project and plaintiff attorney in the case, welcomed the settlement in a press release from the organization on June 23.

“This landmark settlement proposal will provide answers and certainty to borrowers who have fought long and hard for a fair resolution of their defense claims after being deceived by their schools and ignored or even rejected by the government,” he said. she declared.

Joseph Jaramillo, lead attorney at HERA who represented the plaintiffs alongside Connor, said in the press release that the settlement, if approved, can have a significant impact across the country.

“Our clients have been waiting for justice for years and this settlement has the potential to change the lives of tens of thousands of people and their families,” he said.

U.S. Secretary of Education Miguel A. Cardona, who took over the lawsuit after DeVos resigned in January 2021, wrote in a June 22 statement that the Department of Education believes the settlement will bring equitable relief to borrowers.

“From day one, the Biden-Harris administration has worked to address long-standing issues with the borrower defense process,” he said. “We are pleased to have worked with the plaintiffs to reach an agreement that will provide billions of dollars in automatic relief to approximately 200,000 borrowers and which we believe will resolve the plaintiffs’ claims in a fair and equitable manner for all parties.”

Connor said in the press release that the settlement will help provide prospective students with a way to navigate student loans.

“This will not only help secure billions of dollars in debt forgiveness for defrauded students, but will map out a borrower defense process that is fair, just and effective for future borrowers,” she said.

—Editor Isabella B. Cho can be reached at [email protected] Follow her on Twitter @izbcho.

—Editor Meimei Xu can be reached at [email protected] Follow her on Twitter @MeimeiXu7.


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