The U.S. Department of Education has agreed to cancel $6 billion of student loans for 200,000 student loan borrowers.
Here’s what you need to know.
The Biden administration is continuing its commitment to cancel student loans for millions of student loan borrowers. As part of a settlement agreement in a class-action lawsuit, Sweet v. Cardona, the Education Department will provide full student loan cancellation to approximately 200,000 student loan borrowers who were misled by their college or university. Borrowers will also get a refund of student loan payments made and deletion of any related negative marks on their credit report. It’s a major win for student loan borrowers who have been seeking student loan relief for several years. The original class-action lawsuit included 264,000 student loan borrowers who attended more than 150 colleges and universities such as University of Phoenix and DeVry.
Student loan forgiveness: Biden has canceled $8 billion in student debt under borrower defense to repayment
Before this major announcement on student loan forgiveness, President Joe Biden canceled $25 billion of student loans. This amount included $7.9 billion of student loan cancellation for 690,000 borrowers under borrower defense to student loan repayment and school closures. Borrower defense to repayment is an Obama-era rule that allows student loan borrowers to get student loan cancellation if their school closes or if they were misled by their college or university. Borrower defense to repayment has been featured prominently in lawsuits regarding for-profit schools.
“Since day one, the Biden-Harris Administration has worked to address longstanding issues relating to the borrower defense process,” Cardona said. “We are pleased to have worked with plaintiffs to reach an agreement that will deliver billions of dollars of automatic relief to approximately 200,000 borrowers and that we believe will resolve plaintiffs’ claims in a manner that is fair and equitable for all parties.”
How to qualify for this student loan cancellation
Student loan borrowers who participated in this class-action lawsuit will get their student loans canceled. Here’s how to know if you qualify:
- If you applied for borrower defense to repayment and attended one of the eligible colleges or universities, then your student loans will get canceled.
- If you applied for borrower defense to repayment and attended one of the eligible colleges or universities but your claim was denied, your claim for borrower defense to repayment will be reinstated.
Student loan cancellation: how to apply for borrower defense to repayment
What if you didn’t participate in this class action lawsuit but you believe you were misled by your college or university? You can apply for borrower defense to student loan repayment online. To qualify, you must demonstrate that:
- your college or university closed while you were enrolled or shortly after you withdrew, or
- your college or university misled you.
Under borrower defense to repayment, you can get partial student loan forgiveness or total student loan forgiveness. If you don’t qualify for borrower defense to repayment, remember that there are other ways to get a lower student loan payment, including:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)