Ed Department strikes $6B settlement with students who attended for-profits
Natalie Schwartz
June 23, 2022
Dive Brief:
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The U.S. Department of Education agreed Wednesday to automatically forgive the federal student loans of roughly 200,000 borrowers to settle a class-action lawsuit alleging that the agency delayed granting relief to students who were defrauded by their colleges.
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Under the terms of the Sweet v. Cardona settlement, the Ed Department will automatically forgive about $6 billion in student loans under the borrower defense to repayment regulation, which allows students to have their loans forgiven if their colleges misled them. The U.S. District Court for the Northern District of California will review the proposed settlement in July, according to the Project on Predatory Student Lending, one of the organizations providing legal representation for the students.
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Students will be eligible to receive debt relief if they filed a borrower defense claim against one of the 150-plus colleges listed in the settlement agreement — including large for-profit universities such as Capella and Walden.
Dive Insight:
The settlement agreement could bring to a close a yearslong legal dispute over hundreds of thousands of borrower defense claims. The list of institutions whose borrower defense claimants will receive automatic relief is wide-ranging — it includes currently operating colleges, such as Purdue University Global and Grand Canyon University, as well as shuttered for-profit chains like ITT Technical Institute and Vatterott Educational Centers.
