The Biden administration has agreed to settle a class action lawsuit brought by student loan borrowers for alleged mismanagement of the Borrower Defense to Repayment program, here are the details:
“This momentous proposed settlement will deliver answers and certainty to borrowers who have fought long and hard for a fair resolution of their borrower defense claims after being cheated by their schools and ignored or even rejected by their government,” said Eileen Connor, Director of the Project on Predatory Student Lending, which represented the class of student loan borrowers in the suit.
“Since day one, the Biden-Harris Administration has worked to address longstanding issues relating to the borrower defense process,” said Education Secretary Miguel Cardona in a statement. “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.
The settlement agreement follows a separate Borrower Defense initiative earlier this month by the Biden administration, whereby the Education Department agreed towho previously attended Corinthian Colleges, a notorious national chain of for-profit schools that closed in 2015 following widespread allegations of misconduct. The administration has indicated that borrowers need not even submit an application to qualify for that relief.
Other borrowers, however, would need to submit a Borrower Defense to Repayment application. The settlement announced this week only covers borrowers who already submitted Borrower Defense applications. The Department indicated in the settlement agreement that “attendance at one of these [listed] schools justifies presumptive relief [under Borrower Defense to Repayment]... based on strong indicia regarding substantial misconduct by listed schools.
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