US gov’t to cancel USD 6 bn in student loans for swindled borrowers

The United States will cancel USD 6 billion in student loans for 200,000 borrowers who claimed they were defrauded by their colleges, the administration of US President Joe Biden said.

A settlement agreement between the borrowers and the US Department of Education was filed with the US District Court for the Northern District of California on Wednesday and must be approved by a federal judge.

About 43 million Americans have federal student loan debt, according to educationdata.org.

The loans of the defrauded borrowers will be fully eliminated, and any payments they made will be refunded, according to the court filing of the settlement deal.

The lawsuit from borrowers had accused the administrations of Biden and former President Donald Trump of illegally delaying for years any action on the applications that borrowers had filed with the Education Department seeking debt relief.

In a statement on Thursday, Education Secretary Miguel Cardona described the settlement as “fair and equitable for all parties” and said it will deliver “billions of dollars of automatic relief” to the 200,000 borrowers.

The Project on Predatory Student Lending, which represents students across the US in fighting against student debt, described the settlement as “momentous”.

The Biden administration had previously approved USD 25 billion in student debt forgiveness for about 1.3 million borrowers.

The administration had been reluctant to unilaterally make an unprecedented cancellation of college debt owned by the US government. The president had instead earlier asked Congress to pass a bill forgiving debt that he could sign.

source: