The Supreme Court rejected an effort by three colleges to halt a class-action settlement that’s set to cancel more than $6 billion of federal student loan debt owed by borrowers who say they were defrauded.
The Biden administration’s existing student debt relief program is tied to the Covid-19 national emergency under a 2003 law known as the HEROES Act. | Jemal Countess/Getty ImagesThe Supreme Court on Thursday rejected an effort by three colleges to halt a class-action settlement that’s set to cancel more than $6 billion of federal student loan debt owed by borrowers who say they were defrauded.
The three college operators were challenging the same law — the Higher Education Act’s “compromise” authority — that is widely seen as a fallback option for Biden. The administration’s existing student debt relief program is tied to the Covid-19 national emergency under a 2003 law known as the HEROES Act.
The deal is aimed at wiping out a backlog of hundreds of thousands of those applications, which are known as “borrower defense” claims. Some have languished at the department for years.had argued that the three colleges lacked standing to challenge the settlement in the first place, dismissing the schools’ claims of reputational harm as too speculative.on the idea that the class-action settlement is related to Biden’s broader debt cancellation program, calling them “entirely distinct.
But in the meantime it clears the Education Department to continue processing loan discharges for tens of thousands of borrowers.
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