The US Department of Education has agreed to cancel $6 billion worth of student loans for over 250,000 people as a result of a settlement of a class-action lawsuit.
The case, Sweet v. Cardona, involved 264,000 people who claimed that they were the victims of predatory loan practices by around 150 colleges and universities, including institutions such as DeVry and University of Phoenix.
As part of the settlement, the Department of Education will cancel the loans of all impacted parties included in the lawsuit, as well as refund any payments they made toward the loans. Any negative impacts the loans had on their credit will also be erased.
The settlement serves as an important victory for advocates of student loan relief in the US. Currently, about 43 million Americans, namely one in eight people in the country, have student loan debt.
President Biden has repeatedly stated his commitment to student loan forgiveness. Since taking office, he has erased around $25 billion of student debt. Earlier this month, he canceled $5.8 billion of student loans for 560,000 people.
Student loan forgiveness part of Biden’s campaign promise
Biden started his rollout of cancelations shortly after taking office, nixing 72,000 loans that amounted to $1 billion altogether just last March.
Before Biden took action on student debt, there was already a law in place that canceled the student debt of those whose institutions had closed or committed fraud.
This method resulted in a partial cancelation of debt for students, but the President’s move in March 2021 sought to completely cancel the debt of those affected by this incomplete debt forgiveness.
This form of cancelation was initially introduced in 2015 under the Obama Administration as a provision in the Higher Education Act.