Federal Appeals Court Clears Way for Student Loan Forgiveness and Debt Relief

Student Loan Forgiveness 2023, Biden administration’s plan for student loan forgiveness and other debt relief is one step closer to implementation, thanks to a recent ruling by a federal appeals court.

The ruling clears the way for a settlement in the Sweet vs. Cardona case, which had been stalled for years due to a class action lawsuit filed by thousands of student loan borrowers against the Education Department. The lawsuit claimed that the department had illegally delayed or arbitrarily rejected hundreds of thousands of Borrower Defense to Repayment applications, thereby denying borrowers the student loan forgiveness they were entitled to.

The Borrower Defense program is designed to provide federal student loan discharges and other forms of debt relief for borrowers who were misled by their school through false promises or misrepresentations about key aspects of their program.

Under the settlement agreement, which was approved last fall, nearly a quarter million borrowers who attended several dozen institutions (mostly for-profit schools) listed in the agreement would receive $6 billion in student loan discharges. Some borrowers would also be eligible for other relief, such as payment refunds and updated credit reporting.

However, three schools listed in the settlement agreement appendix sought to intervene in the case and block the relief. American National University, Everglades College, Inc., and Lincoln Educational Services argued that the agreement itself and the process to reach a resolution were unfair, and that being listed in the settlement agreement was damaging to their reputations. Despite their efforts, the federal district court ruled in February that settlement relief could proceed.

The Education Department was set to begin implementing the settlement relief in January, but the intervention by the three schools had delayed the process. With the recent appeals court ruling, the way is now clear for the Biden administration to move forward with the settlement and provide much-needed relief to student loan borrowers.

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