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$6 billion in student-loan forgiveness for 200,000 borrowers just cleared another hurdle — and all members involved in the years-long lawsuit can now get relief

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  • An appeals court rejected three companies’ request to pause relief for borrowers in the Sweet vs. Cardona lawsuit.
  • Last year, a federal judge signed off on a settlement in the case that would give 200,000 borrowers $6 billion in debt relief.
  • Those borrowers filed a lawsuit in 2019 over stalled borrower defense claims against the schools they attended.

After years of stalled student-debt cancellation, thousands of borrowers are finally getting relief.

In 2019, the Project on Predatory Student Lending, on behalf of borrowers who believed they were defrauded by the schools they attended, filed a lawsuit — now known as Sweet vs. Cardona — over stalled borrower defense claims, which are claims borrowers can file to get their debt discharged if they can prove they were defrauded by their school.

While the lawsuit was not resolved under former President Donald Trump’s Education Sec. Betsy DeVos, President Joe Biden’s Education Sec. Miguel Cardona took it on. Cardona agreed to a settlement last summer in the case that would give 200,000 impacted borrowers $6 billion in debt relief. But in January, two for-profit higher-education companies — Lincoln Educational Services Corp. and American National University — and Everglades College, Inc., a nonprofit, filed notices to place a stay on the relief, arguing they were not given due process to dispute the claims made against them in the settlement.

Last week, the Ninth Circuit Court of Appeals rejected the companies’ request to pause the relief — and now, all borrowers within the settlement can finally move forward with their debt discharges as the appeals process plays out.

“Appellants fail to demonstrate a sufficient probability of irreparable harm to warrant a stay of the challenged settlement pending these appeals,” the court wrote in its decision.

In February, federal Judge William Alsup ruled that the settlement relief could move forward for all borrowers aside from the ones who attended the three schools who requested to pause the relief, saying in his decision that it “breaks a logjam that has vexed several Secretaries and allows the Department to redirect resources to other initiatives. And it gives plaintiffs, who have languished in borrower-defense application limbo, their long-awaited relief.”

“Note the relief provided by this settlement (financial and otherwise) will allow plaintiffs to breathe easier, sleep easier, repair their credit scores, take new jobs, enroll in new educational programs, finish their degrees, get married, start families, provide for their children, finance houses and vehicles, and save for retirement,” he continued. “It will allow them not only to move on, but also to move up, elevating others in the process.”

As the Project for Predatory Student Lending detailed on its website, borrowers who submitted a borrower defense claim against one of the schools on this list will receive automatic relief, and the Education Department will notify them of that relief by April 28, 2023. 

Borrowers who filed a claim against a school not included on that list will receive relief based on the following timeline:

  • Within six months of the settlement agreement for claims submitted on or before December 31, 2017
  • Within 12 months of the settlement agreement for claims submitted from January 1, 2018, to December 31, 2018
  • Within 18 months of the settlement agreement for claims submitted from January 1, 2019, to December 31, 2019
  • Within 24 months of the settlement agreement for claims submitted from January 1, 2020, to December 31, 2020
  • Within 30 months of the settlement agreement for claims submitted from January 1, 2021, through June 22, 2022.
Read the original article on Business Insider
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