Education Department Settles Lawsuit, Agrees to Process 170,000 Student Loan Forgiveness Claims

Education Department Settles Lawsuit, Agrees to Process 170,000 Student Loan Forgiveness Claims
U.S. Secretary of Education Betsy DeVos testifies during a hearing before House Education and Labor Committee on Capitol Hill in Washington on Dec. 12, 2019. Alex Wong/Getty Images
Bill Pan
Bill Pan
Reporter
|Updated:

The U.S. Department of Education has agreed to process student loan forgiveness applications for nearly 170,000 borrowers who claimed they were defrauded by for-profit colleges, as part of a settlement in a long-standing federal lawsuit.

If approved by the U.S. District Court in California, the settlement would end a case file June 2019, when consumer groups complained about the Education Department’s unwillingness to implement the Obama-era “borrower defense” rule, which allows students defrauded by for-profit colleges to have their loan debt wiped out. Instead, the Department came up with a new plan that would provide partial relief to most of the borrowers, based on their present-day income.

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