Biden Administration Cancels $6 Billion In Loans For Students Who Claim They Were Defrauded

President Joe Biden approved the cancellation of college debt for 200,000 students who claimed their college defrauded them. The move is expected to cost an estimated $6 billion.

The proposed settlement was approved recently, but a judge still needs to sign off on the reimbursement. 

The students filed under the borrower defense to repayment rule. If approved and signed off, the rule allows for students who believe colleges misled them to receive relief from their loans.

The claims often revolve around inflated rates of employment for graduates or false transfer credits. After approval by a judge, the relief will go into effect no later than one year after the initial signing.

In the past, the administration has approved a $25 billion loan forgiveness to 1.3 million Americans.

Eileen Connor, director of Harvard Law School’s Project on Predatory Student Lending, represents the students in their efforts to get relief for their defrauded loans.

“This momentous proposed settlement will deliver answers and certainty to borrowers who have fought long and hard for a fair resolution of their borrower defense claims after being cheated by their schools and ignored or even rejected by their government,” Connor stated. 

The settlement is also fighting to get relief for another 68,000 students. The Biden administration has yet to comment on the remaining borrowers.

Last month, Biden canceled student loan debt worth $5.8 billion for former students of Corinthian College.