On Thursday, the Supreme Court justices declined to intervene over a class-action settlement that could lead to the cancellation of more than 200,000 loans based on claims that around 150 colleges misled students.
This legal settlement would cancel more than $6 billion in student loan debt. Students say that they were misled by their schools, mostly for non-profit institutions. The settlement is the result of a class-action suit against the Department of Education in 2019. The accusation was that schools were boosting enrollment through misleading advertisements and exaggerating the quality of their education and future job opportunities.
The lawsuit was filed by attorney generals in 20 conservative states. The Biden administration stated in a court filing that about 78,000 people have had their loans discharged so far. The case is unrelated to President Joe Biden’s broader effort to forgive student loan debt, $430 billion for about 40 million borrowers to be precise. That is also being presented before the judges, with a ruling expected to be announced in the next two months.
Three of the schools identified in the settlement argued in court filings they had suffered reputational harm, comparing their inclusion on the settlement’s list of schools to being “branded with [a] scarlet letter.” They also argued the Biden administration lacked the legal authority to cancel the debt. They challenged the agreement after it was approved by a federal judge in California last November.
Eileen Connor, director of litigation at the Project on Predatory Student Lending, which is a group that represents borrowers involved in the settlement, spoke out about the issue. “Today’s swift and decisive action from the highest court should end, once and for all, any ongoing debate about the legitimacy of this settlement. The message is clear: the rights of student borrowers will not falter, even in the face of well-funded, overblown political attacks masquerading as legal argument,” Connor said.
