Biden’s administration proposes to forgive $6 billion in student debt for 200,000 people in settlement

The Biden administration this week agreed to forgive about $6 billion in federal student debt for about 200,000 people attending schools it claimed had defrauded them.

The Department of Education said it would clear debt for the borrowers in a proposed settlement filed in federal court on Wednesday. The settlement concerns a class-action lawsuit filed in 2019 that accused the Trump and Biden administrations of delaying resolutions for borrowers who have applied for waivers.

The proposed settlement must be approved by a judge and a hearing is scheduled for next month.

In addition to canceling debt, the agreement would repay borrowers for money they previously paid to the Department of Education and offer credit recovery options.

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The deal would reverse 128,000 “denial messages” sent to people seeking exemption during the Trump administration, according to multiple reports.

The agreement would help people who have attended dozens of different schools, mostly for-profit colleges and other vocational schools. The schools include the University of Phoenix, DeVry University, and more.

The department said in the proposed settlement that attendance at the schools “justifies presumptive relief, for the purposes of this settlement, based on strong evidence of substantial misconduct by publicly traded schools, whether credibly claimed or in some proven cases, and the high percentage of class members with applications related to the said schools.”

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Education Minister Miguel Cardona said in a statement on Wednesday: “We are pleased to have worked with the plaintiffs to reach an agreement that will provide billions of dollars in automatic lighting for approximately 200,000 borrowers and which we believe will support the claims of the plaintiffs will resolve in a manner that is fair and equitable to all parties.”

The move comes after officials announced earlier this month that federal student loans will be canceled from people who borrowed money to attend a school owned by Corinthian Colleges. The discharge was approximately $5.8 billion in compensation for more than half a million borrowers.

Federal student loan payments remain frozen amid the ongoing coronavirus pandemic, although the freeze is currently being lifted by the end of August.

It’s also because President Joe Biden is considering broader student loan forgiveness. He forgivingly supported up to $10,000 of student loan debt for every borrower during his presidential campaign, though he has also said widespread loan forgiveness should come from Congress.

Contributing: Chris Quintana, USA TODAY

This article originally appeared on USA TODAY: Student loans: Biden admin proposes to forgive $6 billion in debt

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