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$6 Billion Student Loan Settlement: See Who Qualifies

$6 Billion Student Loan Debt Settlement Approved by Supreme Court, Bringing Relief to Borrowers
The Supreme Court quickly issued a decision dismissing a petition by academic institutions that had challenged the student loan debt settlement. (Photo: Getty Images)

The Supreme Court last week decided not to overturn a deal that would enable the cancellation of thousands of student loan debts.

In a succinct ruling obtained by NBC News, the Supreme Court denied universities’ desire to appeal the settlement.

President Joe Biden’s larger push to eliminate student loan debt is unconnected to the issue, which is now before the court with a decision expected in the next two months.

As The Santa Clarita Valley Proclaimers reported, the class-action settlement relates to loans that students allege should be cancelled because they were obtained based on false statements made by their schools, many of which are for-profit institutions. Over $6 billion may be at stake in the deal.

$6 Billion Student Loan Debt Settlement Approved by Supreme Court, Bringing Relief to Borrowers

On Thursday, the Supreme Court did not block a student loan debt settlement that will help thousands of borrowers get a handle on their student loan debt. (Photo: The New York Times)

Supreme Court OKs $6 Billion Student Loan Settlement

The Supreme Court declined to intervene in a long-running lawsuit regarding the decision of requests for the forgiveness of student loan obligations at 151 for-profit institutions, NPR said.

Everglades College Inc., Lincoln Educational Services Corp., and American National University Inc. petitioned the high court to intervene and stop the settlement from happening because they believed it would inflict “reputational harm.” 

Additionally, they argued that the secretary of education lacked the power to resolve disputes by giving “student loan cancellations and refunds.”

The settlement, which was granted in federal court last November, totalled more than $6 billion and cancelled and reimbursed 200,000 federal student loans at 151 colleges.

READ ALSO: Student Loan Chaos: Major Servicer Lays Off 500 Staff Due To Funding Issues

Who is Eligible?

A list of the participating schools is included in the settlement as “Exhibit C.” The Project on Predatory Lending also maintains a list of all participating institutions, the majority of which are for-profit universities. The project spoke for the borrowers in the lawsuit.

Higher education expert Mark Kantrowitz told CNBC News that if a borrower attended one of these universities and submitted an application for a borrower defense debt discharge on or before June 22, 2022, they should be eligible for automatic relief. 

Kantrowitz noted that even though their application was previously turned down, they should now be eligible.

Borrowers who are entitled to automatic relief will most likely get the cancellation by January 28, 2024.

Some debtors can see receiving money as part of the deal in addition to having the debt erased from their records.

All prior payments will also be refunded, according to Kantrowitz.

As part of the settlement, those borrowers who attended institutions that aren’t on that list but have submitted a borrower defense application ought to gain from a simplified and expedited examination of their case.

READ ALSO: Student Loan Payments: New Lawsuit Eyes Lifting Payment Pause

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