The United States will cancel $6 billion in student loans for 200,000 borrowers who claimed they were defrauded by their colleges, the administration of U.S. President Joe Biden said.
A settlement agreement between the borrowers and the U.S. Department of Education was filed with the U.S. District Court for the Northern District of California on Wednesday and must be approved by a federal judge.
Student debt cancellation has become a priority for many liberals and one that could shore up popularity with younger voters, who lean Democratic, before November’s midterm congressional elections.
About 43 million Americans have federal student loan debt, according to educationdata.org.
The loans of those borrowers will be fully eliminated, and any payments they made will be refunded, according to the court filing of the settlement deal.
The lawsuit from borrowers had accused the administrations of Biden and former President Donald Trump of illegally delaying for years any action on the applications that borrowers had filed with the Education Department seeking debt relief.
In a statement on Thursday, Education Secretary Miguel Cardona described the settlement as “fair and equitable for all parties” and said it will deliver “billions of dollars of automatic relief” to the 200,000 borrowers.
The Project on Predatory Student Lending, which represents students across the U.S. in fighting against student debt, described the settlement as “momentous.”
The Biden administration had previously approved $25 billion in student debt forgiveness for about 1.3 million borrowers.
The administration had been reluctant to unilaterally make an unprecedented cancellation of college debt owned by the U.S. government, despite pressure from progressives within his party.
Republicans have voiced concerns about proposals to wipe out student debt, saying it would unfairly pass on debt to those who either never took out student loans or those who worked to pay off their student loans. GOP members have also asserted that student loan forgiveness would unfairly benefit wealthy Americans, as a Brookings Institution report revealed that one-third of student loan debt is owned by the wealthiest 20% of Americans.
The president has asked Congress to pass a bill forgiving debt that he could sign.
Copyright 2022 Thomson/Reuters (Additions and edits for FISM News by Michael Cardinal)