Court pushes back hearing over $6B borrower defense settlement
Natalie Schwartz
July 19, 2022
The delay comes after four institutions argued that the deal between the Education Department and student borrowers would harm their reputations.
A federal court has delayed a hearing that would decide whether to preliminarily approve a $6 billion proposed settlement between the U.S. Department of Education and student loan borrowers who allege their colleges misled them.
Last month, the Ed Department announced it had struck a settlement proposal that would automatically forgive the federal student loans of roughly 200,000 borrowers. The deal would resolve a class-action lawsuit that accuses the agency of improperly handling borrower defense to repayment claims, which allow defrauded students to have their loans forgiven.
Four institutions, two for-profit and two nonprofit, filed motions last week to intervene in the case, arguing the settlement would sidestep regulations and harm their reputations. U.S. District Judge William Alsup now plans to hold a hearing in early August on those motions and on whether to grant preliminary approval for the settlement. The preliminary approval hearing had originally been scheduled for the end of July.
