Colleges Lose Appeal to Stop Debt Relief Settlement
Katherine Knott
November 6, 2024
A group of colleges that challenged a legal settlement that canceled $6 billion in student loans lost its appeal to stop that agreement from taking effect.
A divided three-judge panel of the U.S. Court of Appeals for the Ninth Circuit ruled Tuesday that the colleges lacked the necessary standing to challenge the settlement, which was approved in November 2022 and ended a long-running lawsuit over the Education Department’s handling of applications for debt relief under a process known as borrower defense to repayment. Under borrower defense, borrowers can apply for loan forgiveness if they’ve been defrauded or misled by their college.
The settlement discharged the loans for more than 200,000 borrowers who attended one of the more than 150 institutions identified by the Education Department, including those that appealed. Most of the institutions on the department’s list, known as Exhibit C, are for-profit colleges or universities.
