The US Department of Education (ED) is now settlement of student loan borrowers who claimed they were defrauded by their colleges after a federal judge recently ruled that the $6 billion settlement could proceed, The Washington Post reported.
The settlement stems from a 2018 class-action lawsuit by people who accuse ED of ignoring requests for loan forgiveness through the federal Borrower Defense Program. First upheld in November, the verdict was appealed by Everglades College, American National University and Lincoln Educational Services, the parent company of Lincoln Technical Institutes.
The judge in the case, U.S. District Judge William Alsup, denied a motion to halt the full settlement on February 24, but agreed to suspend the loan cancellations for a week for applicants from the three schools to give the schools a chance to seek an appeals court stay.
“Resolution of the long-delay litigation should no longer be delayed by three secondary schools that were not parties to the settlement agreement and that were not involved in the long and acrimonious litigation that preceded it,” Alsup wrote in his decision.
A spokesman for Everglades College said the school had requested such a stay. The three schools listed above are among 151 institutions—many for-profit—that The ED said he had engaged in “serious misconduct… either credibly alleged or in some cases proven”.
“Accountability and transparency require regulatory rigor, adherence to due process, and strict adherence to the law that protects not only students and taxpayers, but also the institutions that serve them,” Everglades College said in a statement Thursday. “We believe that every student with a valid [borrower defense] the claimant is entitled to a fair trial. However, the settlement ignores the law and provides relief without regard to the evidence or merits of the particular claim.”
Objections include that the settlement did not evaluate the validity of the debtors’ claims and that ED violated federal procedure. Alsup, however, argued that the schools have not lost any due process rights and have not shown how the settlement actually harms them.
“The relief provided by this settlement … will allow plaintiffs to breathe easier, sleep easier, repair their credit scores, take new jobs, enroll in new educational programs, complete their degrees, marry, start families, provide for their children, finance their homes. and vehicles and save for retirement,” Alsup wrote. “It will allow them to not only move on, but to move up and uplift others in the process.”
The settlement provides assistance to about 200,000 people, including refunds paid to the federal agency and credit repair. And approximately 64,000 additional borrowers who attended schools not on the ED list are eligible for ongoing application decisions.