Biden Administration to cancel $6 Billion in student loan debt for 200,000 borrowers over fraud

The Biden administration has agreed to cancel about $6 billion in federal student loan debt for about 200,000 people who attended schools that they say defrauded them.

$6 Billion Student Loan Debt To Be Canceled

Borrowers had filed a class-action lawsuit entitled Sweet v. Devos in 2019 against the federal agency, saying that they were stuck paying off debt from schools that misled them.

The plaintiff of the lawsuit developed a list of colleges and universities that engaged in such misconduct, according to the federal agency, and were included in the lawsuit. Some of those colleges were DeVry University and University of Phoenix.

After three years of litigation, the Biden Administration agreed to settle the lawsuit, cancelling about $6 billion in student loans plus refunds of amounts paid and credit repair for those who missed payments.

“We are pleased to have worked with plaintiffs to reach an agreement that will deliver billions of dollars of automatic relief to approximately 200,000 borrowers and that we believe will resolve plaintiffs’ claims in a manner that is fair and equitable for all parties,” United States Secretary of Education Miguel Cardona said in a statement.

This settlement comes two weeks after the Biden administration forgiven student loan debt of nearly 560,000 students who attended Corinthian Colleges.

The proposed settlement must be approved by a federal judge. A hearing is scheduled for July 28.