Borrowers Represented by HLS Organization Reach Settlement with Federal Government to Cancel $6 Billion in Student Loans

Student borrowers reached a settlement with the U.S. Department of Education last month that will cancel around $6 billion in student loans across a group of more than 200,000 people if approved by a federal judge.

Seven students first brought the suit against the U.S. Department of Education under Betsy DeVos in June 2019, when the department stopped processing borrower defense applications. In October 2019, U.S. District Judge William H. Alsup certified a class of more than 200,000 student borrowers seeking relief from some or all of their federal student loan debt who claim their school misled them or acted illegally.

The plaintiffs in the case are represented by attorneys from the Project on Predatory Student Lending of the Legal Services Center of Harvard Law School — which seeks to represent students against for-profit colleges — and the California-based legal nonprofit Housing and Economic Rights Advocates.

On July 28, the court will hold an initial hearing to decide whether or not to approve the settlement. If the court grants preliminary approval, the Department of Education will notify class members, who can then comment on the settlement agreement. After reviewing comments, the court will hold a final hearing in fall 2022.

Eileen Connor, the director of the Project on Predatory Student Lending and a plaintiff attorney on the case, lauded the settlement in a press release from the organization on June 23.

“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 the government,” she said.

Joseph Jaramillo, a senior attorney at HERA who represented the plaintiffs alongside Connor, said in the press release that the settlement, if approved, can have a wide-ranging impact across the country.

“Our clients have been waiting years for justice and this settlement has the potential to make a life-changing difference for tens of thousands of people and their families,” he said.

U.S. Secretary of Education Miguel A. Cardona, who took over as the defendant in the suit after DeVos resigned in January 2021, wrote in a June 22 statement that the Department of Education believes the settlement will bring fair relief to borrowers.

“Since day one, the Biden-Harris Administration has worked to address longstanding issues relating to the borrower defense process,” he 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.”

Connor said in the press release that the settlement will help provide future students with a path to navigating student loans.

“It will not only help secure billions of dollars in debt cancellation for defrauded students, but charts a borrower defense process that is fair, just, and efficient for future borrowers,” she said.

​​—Staff writer Isabella B. Cho can be reached at isabella.cho@thecrimson.com. Follow her on Twitter @izbcho.

—Staff writer Meimei Xu can be reached at meimei.xu@thecrimson.com. Follow her on Twitter @MeimeiXu7.