Nearly 500,000 borrowers who say colleges defrauded them are getting student debt relief
TheGrio...
A years-long legal fight spanning three presidential administrations is delivering loan discharges, refunds and credit repairs to borrowers who accused schools of misleading them.
For hundreds of thousands of federal student loan borrowers, relief that once seemed buried beneath government delays and years of litigation is finally becoming real.
450,000 borrowers who said their colleges misled or defrauded them are receiving student debt relief through the landmark settlement in Sweet v. McMahon, according to CNBC. The case, previously known as Sweet v. DeVos and Sweet v. Cardona, has stretched across three presidential administrations and become one of the largest class-action settlements in U.S. history.
At the center of the case is the borrower defense to repayment, a federal protection that allows people to seek cancellation of federal student loans when a college engages in certain kinds of misconduct. That can include misrepresenting job placement rates, expected salaries, program costs, accreditation or whether course credits will transfer to another school.
The lawsuit was originally filed in 2019 after borrowers accused the Department of Education under then-Secretary Betsy DeVos of unlawfully delaying and denying their borrower-defense applications. Some applicants had been waiting years for the federal government to decide whether schools had deceived them.
A settlement reached in 2022 required the Education Department to process the stalled claims according to court-ordered deadlines. Depending on when borrowers applied and which institution they attended, qualifying relief may include cancellation of federal loans associated with the school, refunds of certain payments and corrections to borrowers’ credit reports.
The legal fight did not end with the settlement.
Under President Donald Trump’s current administration, the Education Department sought additional time to review claims from borrowers who applied after the settlement was announced but before it received final court approval. Those applicants are known as post-class borrowers.
On July 17, a unanimous three-judge panel of the U.S. Court of Appeals for the Ninth Circuit rejected the department’s attempt to extend key deadlines. The decision left previous court orders in place and triggered full settlement relief for more than 170,000 additional borrowers whose applications were not decided on time.
Altogether, the settlement has provided or secured an estimated $23 billion in relief for more than 500,000 borrowers, according to the Project on Predatory Student Lending, which represents borrowers in the case. The group has described it as the largest settlement ever reached against the federal government.
The relief carries particular significance for Black borrowers, who are more likely than white borrowers to take on student loans, borrow larger amounts and continue carrying balances years after leaving college. For many Black families, higher education has long been promoted as a pathway toward economic security, even as the cost of pursuing a degree has placed that security further out of reach.
That burden becomes especially damaging when schools sell students promises they cannot deliver.
Borrowers covered by the settlement do not need to pay a company or outside service to receive their relief. The Project on Predatory Student Lending has warned that anyone asking for money to accelerate a borrower-defense claim or guarantee approval is likely attempting a scam.
The settlement does not erase every American’s student loan debt, nor does it automatically cover borrowers who never submitted a borrower-defense application. It instead provides relief to defined groups of borrowers whose applications were included in the litigation and settlement deadlines.
For those borrowers, however, the outcome offers something they have demanded for years: recognition that students should not be forced to repay federal debt created through a school’s deception, particularly when the government failed to respond in time.