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Friday, October 4, 2024

US To Cancel & Refund $6 Billion In Student Loans For 2 Lakh Fraud-hit Borrowers

The administration of U.S. President Joe Biden said that the United States will cancel $6 billion in student loans for 200,000 eligible borrowers who claimed they were defrauded by their colleges, as per a Reuters report.

In the class-action lawsuit against the government, borrowers claimed that they were stuck with federal debts from schools that were found to have misled them.

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A settlement agreement between the affected borrowers and the U.S. Department of Education was filed with the U.S. District Court for the Northern District of California this week on Wednesday and needs approval by a federal judge.

Student debt cancellation has become a priority for many liberals and one that could shore up popularity with younger and more highly-educated voters, who lean Democratic, before November’s midterm congressional elections this year, the report stated. 

The loans of those borrowers who claim to have been defrauded by their colleges will be fully eliminated, and any payments they made will be refunded, according to the court filing of the settlement deal. Their 

The lawsuit from the 2 lakh borrowers had reportedly 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.

Many of the borrowers affected by the new agreement have been waiting years for the Department of Education to process their claims under a rule known as borrower defence to repayment. The rule allows borrowers who were misled by their college, overinflated job placement rates or ability to transfer credits, to request federal student loan relief, as per CNN.

In a statement yesterday, 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 Reuters report mentioned.

Also Read: From Exams To Visas: Ex Bankers’ Startup Helps Indians Study Abroad, Nears Unicorn Status

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

Previously, the Biden administration had reportedly approved $25 billion in student debt forgiveness for about 1.3 million borrowers.

Earlier this month, people who borrowed money to attend a school owned by Corinthian Colleges were told that they will have federal student loans cancelled. The discharge amounted to approximately $5.8 billion in relief for more than a half-million borrowers, as per USA Today 

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

As per CNBC, the plaintiffs had 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 remaining 64,000 borrowers who had already filed borrower defence claims may also be eligible for debt relief under the proposed settlement agreement and will get decisions on their applications within rolling deadlines, based on how long their application has been pending, as per CNN.

The Project on Predatory Student Lending at Harvard Law School reportedly listed dozens of schools that were involved in the settlement. It reportedly includes The Art Institute, ITT Tech and Westwood College.

Also Read: US Based Nursing Student Wakes Up To See $20 Crypto Investment Turn Into Trillions, But There’s A Cruel Twist

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