The Supreme Court yesterday decided not to block a settlement that will cancel as much as $6 billion in unpaid student loans, after three colleges sought the high court’s intervention to detail the settlement.
The three schools — Everglades College, Lincoln Educational Services Corp., and American National University — which are on a list of 150 institutions the federal government has accused of “substantial misconduct” have about 4,000 loans that will be canceled if the $6 billion settlement is allowed to proceed. The case now heads back to the Court of Appeals for the Ninth Circuit. Depending on the ruling from the Ninth Circuit, the case could go back before the Supreme Court before all is said and done. The request that was denied yesterday was for emergency relief.
The schools argue that the Education Department has exceeded its authority as it tries to deal with a backlog of applications filed by individuals under the borrower defense to repayment program, which offers relief from student loans to individuals who were misled or defrauded by illegal acts of the schools issuing the loans.
The settlement was reached last year by students who sued the federal government back in 2019. The lawsuit accused the Department of Education of not promptly processing their borrower defense to repayment applications, which protects individuals who were defrauded by their schools and provides them with the opportunity to have their debts canceled. At the time, nearly 160,000 applications were pending, with some waiting years for word on their requests.
But the Biden administration has taken significant steps since coming to power, canceling more than $2 billion in student loans under the program.
