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An estimated 200,000 defrauded former college students are set to have $6 billion in federal loan debt wiped clean as part of a proposed settlement agreement filed June 23 in federal court.
Borrowers in the proposed settlement attended one of over 150 schools that the US Department of Education has determined engaged in misconduct, including:
- The Art Institute
- Le Cordon Bleu
- ITT Tech
- DeVry University
- Keiser University
- University of Phoenix
- Westwood College
Nearly all the schools involved are for-profit colleges or vocational programs.
These 200,000 borrowers will see a full discharge of their loans, a refund of what they’ve paid and credit repair starting no later than one year after the agreement formally goes into effect, according to the proposed settlement agreement.
Meanwhile, another 64,000 borrowers will get individualized decisions on their federal debt relief within rolling deadlines, depending on how long their application has been pending.
The settlement stems from a 2019 class action lawsuit called Sweet v. Cardona.
The case argues that many borrower defense claims for loan cancellation were ignored by the US Department of Education.
Borrower defense to loan repayment — or borrower defense for short — allows former students to discharge some or all of their federal loans if their school defrauded them or violated specific state laws, like consumer protection statutes.
To qualify for borrower defense, former students had to first prove they were misled by their school — often over inflated job placement rates or the ability to transfer credits.
Borrowers then had to prove those lies caused personal financial damage, such as not being employable as a result of the program.
How Do You Qualify For Borrower Defense?
Wondering if you qualify for debt relief from the Sweet v. Cardona class action lawsuit?
You’re included if you submitted a borrower defense application on or before June 22, 2022, and have not received a…
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