As a result of the Supreme Court’s decision, 200,000 borrowers will be able to receive debt relief worth $6 billion. A class action lawsuit alleging borrower fraud was filed in 2019, resulting in this redress. The Supreme Court had been petitioned to delay the relief by three of the settlement’s designated institutions.
Many people who took out student loans recently received good news from the Supreme Court. A settlement reached after years of litigation, now known as Sweet vs. Cardona, was approved by the Supreme Court on Thursday, providing $6 billion in student debt relief for 200,000 debtors.
The lawsuit was initially launched in 2019 while President Donald Trump was in the office on behalf of borrowers with pending borrower defense claims. These are claims borrowers can submit if they believe they were scammed by the school they attended. Their debt would be forgiven if this request were granted.
A federal judge approved the relief in November after President Joe Biden’s Education Department reached a settlement agreement with the plaintiffs in the summer. However, shortly thereafter, three schools included in the settlement appealed the ruling and asked a lower court to stay the relief pending the outcome of the pending legal process.
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The Supreme Court has agreed with the previous ruling of the Ninth Circuit Court of Appeals, which denied the petition. The Supreme Court’s decision was extremely brief, reading, “The application for stay presented to Justice Kagan and by her referred to the Court is denied,” There was no mention of the reasoning for the choice.
In their court brief, the three universities complained that the settlement damaged their reputations without providing them with “due process” to refute the allegations against them. The Education Department, in a response filed with the Supreme Court on Wednesday, disputed those allegations, writing that
“The Department has already begun implementing the settlement by notifying class members that they will receive discharges, directing loan servicers to start processing those discharges, updating its own internal systems to reflect the rescission of previous denials, and beginning the adjudication process for those reopened cases through the settlement’s streamlined procedures.”
“The whipsawing that would occur if the settlement were stayed would cause confusion among the affected borrowers, loan servicers, and the public and would undermine the Department’s ability to effectively implement the borrower-defense program,” it said.
While Vice President Biden has proposed a broader plan to forgive up to $20,000 in federal student loans, this move stands alone. In November, the plan was put on hold because of two lawsuits supported by conservatives that aim to permanently prevent the relief, the Supreme Court heard oral arguments in both cases in February.
By June, it should have decided whether or not the comprehensive debt relief package can be implemented legally.
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