Judge Gives Preliminary Approval of Borrower-Defense Settlement
Meghan Brink
August 5, 2022
A federal judge said Thursday he will give preliminary approval to a settlement deal for a years-long lawsuit against the Education Department that would automatically cancel $6 billion in student debt owed by nearly 200,000 borrowers who say they were defrauded by their colleges. The judge also allowed four colleges listed in the case to intervene.
Judge William Alsup of California called the settlement a “grand slam” for borrowers who were former students of 153 colleges listed in the settlement that was proposed by the Education Department in June. The judge also said that he is tentatively planning to grant multiple motions to intervene filed by for-profit colleges, including Lincoln Education Services Corporation, American National University, Everglades College and the Chicago School of Professional Psychology.
The colleges that requested to intervene in the case argued that under the proposed settlement, they would not be given the opportunity to respond to borrower-defense claims, which could harm the colleges’ reputations. They were also concerned about the Education Department attempting to recoup the funds of the discharged loans from the colleges.
