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The Supreme Court ruled that $6 billion in student-debt relief for 200,000 borrowers can move forward.
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This relief is part of a settlement from a lawsuit filed in 2019 by borrowers who said they were defrauded.
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Three schools named in the settlement had asked the Supreme Court to pause the relief.
The Supreme Court just handed thousands of student-loan borrowers a victory.
On Thursday, the nation’s highest court ruled that $6 billion in student debt relief for 200,000 borrowers — a result of a settlement from a years-long lawsuit now known as Sweet vs. Cardona. The lawsuit was first filed in 2019 under former President Donald Trump on behalf of borrowers with stalled borrower defense claims, or claims borrowers can file if they believe they were defrauded by the school they attended. If approved, their debt would be wiped out.
President Joe Biden’s Education Department agreed to a settlement last summer, and a federal judge signed off on the relief in November. However, shortly after, three schools named in the settlement appealed the decision and requested a lower court pause the relief as the legal process plays out. The Ninth Circuit Court of Appeals rejected the request, and now, the Supreme Court came to the same conclusion.
“The application for stay presented to Justice Kagan and by her referred to the Court is denied,” the Supreme Court wrote in its very brief decision. It offered no explanation for its decision.
The three schools argued in their legal filing that they were not given “due process” to respond to the claims in the settlement, and they said they suffer reputational harm from the settlement. However, the Education Department pushed back on those claims, writing in its response filed with the Supreme Court on Wednesday that “the Department has already begun implementing the settlement by notifying class members that they will receive discharges, directing loan servicers to start processing those discharges, updating its own internal systems to reflect the rescission of previous denials, and beginning the adjudication process for those reopened cases through the settlement’s streamlined procedures.”
“The whipsawing that would occur if the settlement were stayed would cause confusion among the affected borrowers, loan servicers, and the public and would undermine the Department’s ability to effectively implement the borrower-defense program,” it said.
This decision is separate from Biden’s broad plan to cancel up to $20,000 in student debt for federal borrowers. That plan was paused in November due to two conservative-backed lawsuits seeking to permanently block the relief, and the Supreme Court heard oral arguments for the cases in February. It’s expected to issue a final decision on the legality of the broad debt relief plan by June.
Read the original article on Business Insider
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