Another 200,000 borrowers could have their student debt forgiven by the Ministry of Education

(NEXSTAR) – Thousands of borrowers will likely see their federal student loan debt wiped out after a settlement was reached Wednesday in a proposed class action settlement.

Under the proposed settlement, the Biden administration agreed to pay off federal student loan debt for about 200,000 borrowers. According Politicswho first reported the settlement, the borrowers claimed they were defrauded by their college and their requests for relief from the Department of Education were delayed for years.

The borrowers in the lawsuit have accused both the Trump administration and the current administration of failing to act on their requests for “borrower defense” relief for years, Politico reports. The Department of Education can discharge all or part of a borrower’s federal student loans if their school has misled or engaged in misconduct.

The deal could result in the cancellation of more than $6 billion in student debt.

It still needs to be approved by a judge before the approximately 264,000 lawsuit members, who have already filed borrower defense claims, can receive debt relief. Of these members, approximately 200,000 attended some schools that the Ministry of Education considers to have committed a fault, a Release of the Harvard Law School Project on Predatory Student Loans explains.

The project, which filed the lawsuit, said these borrowers will receive “full discharge of their loans, reimbursement of monies paid and repair of credit”. The other 64,000 members attended schools that have not been identified as participating in misconduct. These individuals will have their claims decided by the Department of Education.

Calling the action a “proposed settlement momentous,” Eileen Connor, director of the Predatory Student Loans Project, said in a statement. “This will not only help secure billions of dollars in debt forgiveness for defrauded students, but will map out a borrower defense process that is fair, just and effective for future borrowers.”

“We are pleased to have worked with the plaintiffs to reach an agreement that will provide billions of dollars in automatic relief to approximately 200,000 borrowers and which we believe will resolve the plaintiffs’ claims in a fair and equitable manner for all parties,” said the Secretary of State. Education Miguel Cardona said in a statement published late Wednesday evening.

Debt relief has already been approved for thousands of borrowers

About 1.3 million borrowers saw $25 billion in student loan forgiveness since Biden to take place.

Thousands of people have received $6.8 billion in debt forgiveness “thanks to PSLF improvements”, according to the Ministry of Education. The Civil Service Loan Cancellation Program, or PSLF, aims to provide debt relief for employees working with nonprofits and government agencies after making the necessary amount of payments. More than 400,000 borrowers have received more than $8.5 billion in debt forgiveness through total and permanent disability release. About 690,000 other borrowers saw a total of $7.9 billion in student loans forgiven through releases due to borrower defenses and school closures.

More recently, the Ministry of Education announced the repayment of approximately $5.8 billion in loans for 560,000 borrowers from the old Corinthian Colleges. The school has been the subject of multiple investigations and has been accused of defrauding millions of students out of federally guaranteed loans.

Will Biden grant a blanket pardon?

During his election campaign, President Biden supported the cancellation of student loans. In April, he confirmed that he was considering some kind of blanket federal student debt cancellation. Now, two months later, is student loan forgiveness still on the table?

The answer is yes, Biden is still considering debt relief. When asked by reporters on Monday as he strolled on a Delaware beach if he was close to a decision on student loan forgiveness, Biden replied, “Yes,” according to CNN.

Previous reports indicated that Biden is should make a decision in the next two months. Here is what we know about his potential decision.

Federal student loan payments remain suspended until August 31. Biden could approve another extension to the payment moratorium in light of rising interest rates and depending on the state of the economy in August, according to the Associated Press.

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