A settlement offering $6 billion in student loan forgiveness clears the hurdle: 5 key takeaways – Forbes | Vette Leader

Last week, a federal court granted preliminary approval for a landmark settlement agreement between President Biden’s Department of Education and a class of student loan borrowers. The settlement aims to resolve a lawsuit over deadlocked student loan forgiveness applications for borrowers who claim their schools have cheated them.

As the settlement process continues, borrowers need to know the following.

Borrower Defense for Repayment: Student loan forgiveness for borrowers who have been misled by their school

The settlement agreement is to be dissolved sweet v Cardona (previously Cute vs DeVos), a class action lawsuit that has been ongoing for several years. Student loan borrowers filed the lawsuit during the Trump administration years, arguing that the Department of Education simply ignored (and subsequently arbitrarily denied) requests for borrower defenses to facilitate repayment.

The Borrower Defense for Repayment is a federal student loan cancellation program that can pay off federal student loan debt for borrowers who have been misled by their schools by false promises or misrepresentations about admission selectivity, career prospects, and other key program elements.

The proposed settlement agreement provides for $6 billion in student loan forgiveness if approved

The proposed settlement agreement to resolve the Sweet The case would net over 250,000 borrowers who attended one of dozens of schools on a proposed list of institutions a $6 billion student loan forgiveness. But first, the settlement must go through a formal court approval process.

The parties cleared their first hurdle last week when the judge overseeing the case granted preliminary approval for the proposed settlement agreement. But the process doesn’t end here.

Next, the department needs to send out notices to all potential group members who could benefit from the proposed settlement. The department uses last known contact information — including borrowers’ email and postal addresses — to send these communications. Borrowers will have an opportunity to make formal comments on the proposed settlement agreement and information on the commenting process should be provided in the notices. Borrowers have until September 15, 2022 to submit comments.

Barring material changes to the proposed agreement, the parties must then apply to the court for final approval of the settlement by September 22. The court has scheduled a hearing for final approval of the proposed settlement agreement for November 3, 2022 (although that date is subject to change).

Borrowers who have already filed for loan defense requests don’t have to do much

Under the proposed settlement agreement, borrowers who have filed petitions for borrower defenses by June 22, 2022 and attended any of the schools on the proposed list need not do much. If the court finally approves the settlement agreement after the hearing, currently scheduled for November, those borrowers should automatically recover their applicable federal student loans.

Borrowers who submitted a Borrower Defense Request for repayment by June 22, 2022 but were denied by the Department of Education between December 1, 2019 and October 31, 2020 should receive a notice that the denial has been lifted.

Borrowers who have applied and believe they may be covered by the Settlement Relief should confirm that the Department of Education has their borrower defense application on file. They should also ensure that their email and postal addresses are up to date with the Department of Education’s StudentAid.gov website and its Borrower Defense website so that they can receive important communications about the settlement.

Borrowers who have not filed borrower defense petitions for student loan forgiveness can still do so

Borrowers who have not submitted a Borrower Protection Refund Request by June 22, 2022 can still submit one. But they would not benefit from the unification in the same way as class members.

Borrowers filing requests for borrower repayment after June 22, 2022 but prior to final settlement approval (currently scheduled for early November), and who attended any of the schools on the proposed list, unlike class members, would not be eligible for automatic student loan waivers. However, these borrowers would be entitled to a final decision from the Department of Education within three years of submitting their application. If the Ministry does not make a decision within this period, it has the right to cancel.

Borrowers who did not attend any of the schools on the approved list, or who apply for credit protection after final settlement approval, are still entitled to have their application reviewed on the merits. But they would not derive any direct benefit from it Sweet Settlement Agreement, nor would they be guaranteed consent.

There are resources for borrowers seeking student loan forgiveness by defending the borrower until repayment

Navigating the borrower defense to repayment and the sweet v Cardona Billing can be difficult. These are some key resources borrowers can check out:

More reading on student loans

The Biden administration is poised to implement mass student loan forgiveness as the decision could come any day

5 growing signs that Biden could authorize sweeping student loan forgiveness and an extension of the student loan pause

Did the Biden Administration Just Make a Big Hint About Student Loan Forgiveness?

If you’ve attended these schools, you may qualify for student loan forgiveness: here’s what to do

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