NAICU Washington Update

Ruling Allows Department to Move Forward on Borrower Defense Claims

November 18, 2022

A federal judge in California has ruled on a class action settlement allowing the Department of Education to move forward on the approval of applications for thousands of borrowers. Under the deal, the Department will be able to discharge more than $6 billion owed by approximately 200,000 borrowers who had pending borrower defense to repayment claims against one of 151 schools, which were mostly for-profit institutions.

The Department will also move forward on fast-tracking around 64,000 borrower applications for debt cancellation that have been outstanding, which could potentially cancel about $1.5 billion of debt. In addition, another group of about 179,000 borrowers who filed new borrower defense claims since June 22, will have the opportunity to go through a new process due to the Department’s final rule regarding borrower defense. 

MORE News from NAICU