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$6 Billion Student Loan Debt Settlement: Supreme Court Allows Agreement to Push Through

Student Loan Payment
People hold signs during a Cancel Student Debt rally outside the US Department of Education in Washington, DC, on April 4, 2022. - Demonstrators gathered to call on US President Joe Biden to wipe out all student debt, as the student loan payment pause, put into place during the Covid-19 pandemic, is set to expire on May 1. (Photo by Stefani Reynolds / AFP) (Photo by STEFANI REYNOLDS/AFP via Getty Images)

Based on hundreds of allegations that institutions deceived students, the Supreme Court opted not to halt a $6 billion student loan debt settlement.

The Supreme Court dismissed some institutions’ petitions to contest the settlement.

Daily News pointed out that a class action complaint with 200,000 claims alleged that many universities, especially for-profit ones, deceived students into taking out federal loans.

Student Loan Payment

Activists hold cancel student debt signs as they gather to rally in front of the White House in Washington, DC, on August 25, 2022. – Biden announced on August 24, 2022, that most US university graduates still trying to pay off student loans will get $10,000 of relief to address a decades-old headache of massive educational debt across the country. (Photo by Stefani Reynolds / AFP) (Photo by STEFANI REYNOLDS/AFP via Getty Images)

Suprene Court Rejects Bid to Block $6 Billion Student Loan Debt Settlement

Politico reported that the institutions’ attempt to block the settlement and contest the Education Department’s authority to forgive significant sums of federal student loan debt was rejected by at least five justices who voted in favor of the decision.

Justice Elena Kagan, who is in charge of emergency cases from the 9th Circuit, received the request. The whole court rejected the proposal after Kagan referred it to them. Although it’s unclear how each justice voted, none disagreed.

In an amicus brief obtained by Washington Post, the attorneys explained the Education Secretary “defended” against these class-action claims for years. They added that the Secretary changed heart once the President waived student loan debt via executive order.

“By strategically surrendering the case, the Secretary seized immense power that Congress had never given him. This ill-gotten power enabled the Secretary to pursue the mass forgiveness of student loans,” the attorneys pointed out.

READ ALSO: Great Ways For Families To Fund College: Supreme Court On Student Loans

Who Are Affected By The Decision

The agreement intends to eliminate the backlog of “borrower defense” claims in the hundreds of thousands. The Hill reported some had been waiting around the department for a long time.

The settlement affects students at 151 different schools, and 3,500 students who attended Lincoln Educational Services, American National University, and Everglades College, three defendants in the lawsuit, are eligible for debt relief.

The choice has nothing to do with President Biden’s efforts to relieve 40 million Americans of up to $20,000 in student loan debt. This summer, the court is anticipated to decide on that case.

Attorneys general from 20 conservative states filed the complaint.

According to a court document from the Biden administration, some 78,000 individuals have had their debts canceled thus far.

READ ALSO: Student Loan Forgiveness Debt Relief: What States Offer The Program?

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