DEBT DEMOLISHED

Biden Admin Set to Wipe $6 Billion in Student Loans After Reaching Settlement

More than 200,000 student borrowers alleged in a 2019 lawsuit that the Education Department had illegally ignored their claims of fraud.

Tens of thousands of students who sued the government are likely to have their student debt wiped after reaching a settlement with the Biden administration. The deal, which still needs to be approved by a judge, will result in the cancellation of around $6 billion in student loans, The Wall Street Journal reports. Most of the 200,000 borrowers who sued claimed they were defrauded by for-profit colleges. They then sued the Education Department in 2019, accusing the Trump administration of illegally ignoring their fraud claims. (Borrowers are entitled to debt relief if the government decides a school has deceived students about job prospects, broken state consumer-protection laws, or harmed them financially.) If the settlement is green-lit, the 200,000 borrowers will get immediate relief because they attended schools that the Education Department has already found misled students—but it could also allow another 64,000 borrowers to have their debt wiped as the Education Department reviews their cases. In that case, the settlement could reach a whopping $7.5 billion.