Settlement cancels $6 billion in student loans

(KRON) – Student borrowers in the class action suit Sweet v. Cardona filed a motion late Wednesday to approve a settlement with the United States Department of Justice, which if approved would cancel about $6 billion in student debt from 200,000 people.

There are seven named plaintiffs in the suit, which was first filed in the US District Court for the Northern District of California in 2019; however some 264,000 people are in the plaintiff class. The court will review the settlement, hear from members of the class, and proceed.

The plaintiffs’ brought suit against the US Department of Education seeking relief after they attended one of over 150 schools alleged to have defrauded them. Betsy DeVos, the education secretary at the time, called it “free money,” but current Secretary of Education Miguel Cardona called the settlement “fair” to all.

Theresa Sweet, the named plaintiff, is a nursing assistant who lives in Oakland. She graduated the now-shuttered Brooks Institute of Photography in Santa Barbara in 2005 and applied for relief in 2015.

“The main reason I chose to attend Brooks is because I based much of my decision on job statistics that turned out to be completely fabricated,” Sweet said.

Who gets forgiven?

If the settlement is approved, decisions will be made automatically for anyone who submitted a borrower defense application relating to one of these schools. For those who submitted borrower defense applications but attended other schools, an individual decision on their cases will be rendered by the department of education.

Sweet told KRON4 that “this has been a really long fight” and that she’s “really happy” about the conclusion.

“Settling is the best solution and the least risky for the entire class,” she said, because an approval of plaintiffs’ motion for summary judgment would have been able to be appealed.

Nonetheless, Sweet is disappointed that she and others “had to file in the first place.”

“The department of education has a responsibility to really vet these schools they are giving federal dollars to,” Sweet said.

The Biden administration’s approval of the settlement is one of the most significant actions he has taken on student loans; some prominent Democrats have been pushing student loan forgiveness.

“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, the director of the project on predatory student lending. “It will not only help secure billions of dollars in debt cancellation for defrauded students, but charts a borrower defense process that is fair, just, and efficient for future borrowers.”

Americans together owe some $1.75 trillion in student loan debt.

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