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Hope for Student Loan Debt: $6B Settlement and Biden’s Forgiveness Program

Student loan debt is a major issue in America, with millions of borrowers facing financial difficulties due to their high student loan debt. However, recent developments in the world of student loans offer some hope for these borrowers.

In this article, we will discuss two significant developments related to student loans – a $6 billion settlement related to class action lawsuits and Joe Biden’s student loan forgiveness program. By the end of this article, you will have a clear understanding of both of these developments.

Student Loan Settlement

In early June 2021, Judge Cote of the United States District Court for the Southern District of New York denied a request by some borrowers to halt the implementation of a settlement worth $6 billion. This settlement was reached following several successful class-action lawsuits against several colleges and universities, alleging wrongdoing on the part of these institutions in relation to their student loan programs.

Under this settlement, the institutions in question will provide monetary relief to borrowers who were harmed by their actions. The institutions involved in the settlement include DeVry University, ITT Technical Institute, and the University of Phoenix.

The settlement will be paid out over several years in the form of cash payments, debt relief, and other forms of support. The settlement is a significant victory for borrowers who have been struggling with their student loans for years.

It sends a clear message to institutions that they can no longer take advantage of students seeking higher education. For borrowers who are eligible for relief, this settlement could mean a significant reduction in their student loan debt.

Education Department Discharges Loan Debt

In addition to the $6 billion settlement, the United States Department of Education announced in early June 2021 that it would be discharging $500 million in student loan debt for certain borrowers. This announcement follows a review of the Education Department’s borrower defense program, which provides relief to borrowers who were defrauded by their institutions.

Under the program, borrowers can apply to have their loan debt discharged if they can demonstrate that their institution engaged in misconduct or fraud. Many borrowers who attended ITT Technical Institute, for example, have applied for relief under this program, following ITT’s closure in 2016.

The Education Department’s announcement means that some borrowers who have been waiting years for relief will finally receive it. The $500 million in loan discharges represents a significant step forward in addressing the student loan debt crisis in America.

However, it is worth noting that this relief only covers a fraction of the total student loan debt owed by borrowers in the United States. Lincoln Educational Services Corp.

and American National University Appeal Settlement

While the $6 billion settlement provides hope for many borrowers struggling with their student loan debt, not everyone is happy with the outcome. Lincoln Educational Services Corp.

and American National University have both appealed the decision to uphold the settlement. In their appeal, the institutions argue that the settlement unfairly targets for-profit institutions.

They assert that the settlement will result in significant financial harm to their institutions and could ultimately lead to their closure. They also argue that the lawsuits against them were without merit and that they did not engage in any wrongdoing.

It remains to be seen how this appeal will play out, but for now, borrowers who are eligible for relief under the settlement can still apply for the benefits provided. It is uncertain whether the institutions involved in the settlement will be successful in their appeal, but for now, the decision to uphold the settlement stands.

Biden’s Student Forgiveness Program

Moving on from recent settlements, we now shift our focus to Joe Biden’s student loan forgiveness program. This program has been a hotly debated topic since Biden’s inauguration earlier this year, with some arguing that it would provide significant relief to borrowers while others criticize it for being too broad and expensive.

Under the program, borrowers who attended public colleges and universities can have up to $10,000 in student loan debt forgiven. This would apply to borrowers who earn less than $125,000 a year.

The program would also provide relief to borrowers who attended private Historically Black Colleges and Universities (HBCUs) and Minority-Serving Institutions (MSIs). The program faces legal challenges, however, with many arguing that it is too broad and would place a significant financial burden on taxpayers.

Critics also assert that it does not go far enough in terms of providing relief to the most vulnerable borrowers.

Conclusion

The student loan debt crisis is a significant issue in America, but recent developments provide some hope for borrowers who are struggling with their debt. The $6 billion settlement and the Education Department’s loan discharge program are significant steps forward in addressing the issue.

However, the legal challenges facing Biden’s student loan forgiveness program highlight the need for continued action to address the student loan debt crisis. Americans will need to continue fighting for fair and just education policies to ensure all students receive equitable opportunities and treatment.

Sweet vs. Cardona Lawsuit

A class-action lawsuit was filed against the Education Department in August 2020 on behalf of tens of thousands of borrowers.

The lawsuit alleged that the Education Department had failed to properly process applications for debt relief under the borrower defense program. The lawsuit was filed in response to changes made to the program by the Trump administration, which many believed were designed to make it more difficult for borrowers to receive relief.

The borrower defense program provides relief to borrowers who were defrauded by their institutions and were unable to complete their education or who were saddled with significant debt as a result of attending that institution. Under the program, borrowers can apply to have their student loans cancelled entirely or partially.

The class-action lawsuit was settled in late June 2021, with the Education Department agreeing to provide debt relief to 72,000 borrowers who had applied for relief under the borrower defense program. The settlement is worth over $1 billion and provides an average of $14,000 in debt relief per borrower.

The settlement also includes a requirement that the Education Department review all pending and future borrower defense applications and determine eligibility for relief within 18 months. With this settlement, borrowers who were previously stuck in limbo waiting for their applications to be processed now have a clear path forward.

Alsup’s Decision Validates the Settlement’s Legal Ground

The settlement was reached following a ruling by Judge William Alsup of the United States District Court for the Northern District of California. In his decision, Judge Alsup validated the legal grounds of the settlement, stating that it was “fair, reasonable, and adequate.”

This decision was significant because it came after the Education Department urged the court to reject the settlement, arguing that it was too costly and that it would set a bad precedent for future cases.

Judge Alsup dismissed these arguments, stating that the settlement was “an excellent result” that provided much-needed relief to borrowers who had been defrauded by their institutions. The Sweet vs.

Cardona lawsuit and subsequent settlement represent a significant victory for borrowers who have been waiting years for relief under the borrower defense program. While the settlement provides much-needed relief for many borrowers, it also highlights the need for continued action to address the student loan debt crisis in America.

Borrower Defense Program

The borrower defense program was established under the Obama administration as a response to the closure of several for-profit colleges that had defrauded students. The program was designed to provide relief to borrowers who had attended these institutions and were left with significant debt and no degree to show for it.

Under the Trump administration, the borrower defense program was significantly scaled back, with many borrowers who were eligible for relief seeing their applications delayed or denied without cause. This led to widespread criticism of the Trump administration’s handling of the student loan debt crisis.

The Sweet vs. Cardona lawsuit and subsequent settlement represent a significant step forward in addressing the shortcomings of the borrower defense program under the Trump administration.

The settlement provides relief to thousands of borrowers who had been waiting years for their applications to be processed. It also signals a commitment by the Biden administration to address the student loan debt crisis in America and provide relief to borrowers who have been defrauded by their institutions.

Class-Action Lawsuit Carried Over into the Biden Era

While the Sweet vs. Cardona lawsuit was initiated during the Trump presidency, it has carried over into the Biden era.

This is significant because it signals a continued commitment by the Biden administration to address the student loan debt crisis and provide relief to borrowers. The Biden administration has already taken several steps to address the issue, including the cancellation of student loan debt for borrowers who are permanently disabled and the suspension of student loan payments during the COVID-19 pandemic.

These actions have been widely praised by borrowers and advocates alike and represent a significant step forward in addressing the student loan debt crisis.

Conclusion

The Sweet vs. Cardona settlement is a significant victory for borrowers who have been struggling with their student loan debt for years.

It provides relief to thousands of borrowers who have been waiting for their applications to be processed, and it sends a clear message to institutions that they can no longer take advantage of students seeking higher education. While the settlement is a step forward, it is important to recognize that it only addresses a small fraction of the student loan debt crisis in America.

More action is needed to address the issue, including initiatives to make higher education more affordable and accessible to all Americans. As we move forward, it is important that we continue to fight for fair and just education policies that provide equitable opportunities and treatment for all students.

The recent developments related to student loans offer some hope for borrowers who have been struggling with their loan debt for years. The $6 billion settlement reached in several class-action lawsuits against several colleges and universities, Education Department discharging loan debt, and Sweet vs.

Cardona Lawsuit’s settlement provide much-needed relief to borrowers. The borrower defense program has been established to provide relief to borrowers defrauded by their colleges or universities, and Trump’s delayed or denied eligible applications without cause.

As action is taken to address the student loan debt crisis, it is important to continue to fight for equitable opportunities and treatment for all students. These developments highlight the need for continued action to address the issue.

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