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Education Department to Resolve Borrower-Defense Case

April 13, 2020
 
 

The Education Department agreed to process 170,000 claims by student loan borrowers who want their debts canceled because they were misled by their colleges under a settlement jointly proposed by the department and a consumer group.

If approved by a federal court in California, the settlement would end a case filed in June 2019, when consumer groups complained the department under Secretary Betsy DeVos had not decided any borrower-defense claims, filed by students at for-profit institutions, in a year. Many had been waiting more than four years for a decision, said Harvard University's Legal Services Center’s Project on Predatory Student Lending, which filed the suit with another group, Housing & Economic Rights Advocates.

The department, under the settlement, would commit to giving those who have been waiting a final decision on their application a decision within 18 months, if approved, and their debt would be canceled within 21 months.

“It is an enormous relief to know that students will finally have answers on their borrower defense,” said Theresa Sweet, a plaintiff in the suit. “For years, people have been paralyzed with debt and forced to put their education, personal goals and financial plans on hold because we didn’t know if or when we might get a decision.”

 

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