Federal government to wipe out student loans of 170,000 more defrauded borrowers

An appellate court has sided with student loan borrowers, rejecting a request from the Education Department for more time to review fraud claims. This decision ensures that 170,000 more borrowers, who were defrauded by predatory for-profit schools, will have $11 billion in debt erased. This expansion brings the total number of beneficiaries in this class-action settlement to nearly 500,000 borrowers, with total debt relief reaching $23 billion.

The litigation, which began during the first Trump administration, resulted in a 2022 settlement under the Biden administration that forgave debts for nearly 300,000 plaintiffs. The current ruling prevents the government from delaying the adjudication of new claims beyond the original 2026 deadline. The Project on Predatory Student Lending noted that this represents the largest class-action settlement in American history and one of the largest financial settlements against the federal government.

While the Education Department argues that the original settlement imposed an "unrealistic deadline" and that they have acted in good faith, the 9th U.S. Circuit Court of Appeals unanimously upheld the decision to deny the government's request for an 18-month extension.

(Source：The Boston Globe)