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In Class Action Settlement, Education Department Cancels More Than $6 Billion in Student Loans

AP Photo/Carolyn Kaster

The Department of Education announced Thursday that it reached an agreement with plaintiffs in a class action lawsuit and will cancel student loans for 200,000 borrowers. 


The plaintiffs argued the government was ignoring the borrower defense claims for loan cancellation, which “allows you to discharge some or all of your student debt if your school defrauded you or violated specific state laws, like consumer protection statutes,” according to Business Insider. Individuals need to prove they suffered financial harm, however. 

The settlement means more than $6 billion in debt will be cleared.

The plaintiffs brought their lawsuit against the Trump administration in 2019, representing around 264,000 class members who said their applications for loan cancellation were being ignored by the Education Department. The suit name was later changed from Sweet v. DeVos to Sweet v. Cardona after current U.S. Secretary of Education Miguel Cardona replaced former Trump appointee Betsy DeVos.

“This momentous proposed settlement will deliver answers and certainty to borrowers who have fought long and hard for a fair resolution of their borrower defense claims after being cheated by their schools and ignored or even rejected by their government,” said Eileen Connor, director of the Project on Predatory Student Lending at Harvard Law School.

The project compiled a list of the dozens of schools that are involved in the settlement and that the Education Department has determined engaged in misconduct. (CNBC)


“Since day one, the Biden-Harris Administration has worked to address longstanding issues relating to the borrower defense process," Secretary Miguel Cardona said in a statement. "We are pleased to have worked with plaintiffs to reach an agreement that will deliver billions of dollars of automatic relief to approximately 200,000 borrowers and that we believe will resolve plaintiffs’ claims in a manner that is fair and equitable for all parties.”

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