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The Education Department will erase roughly $11 billion in federal student loan debt owed by more than 170,000 borrowers after a federal appeals court rejected the Trump administration’s attempt to delay relief for students who claimed they were defrauded by their schools.
The July 17 ruling stems from a years-long class-action lawsuit over the federal borrower’s defense program, which allows students to seek loan forgiveness if their colleges misled them or engaged in fraud.
Under a 2022 settlement, the Biden administration agreed to settle thousands of pending claims under Borrower Defense filed before June 22, 2022, or automatically grant relief if it failed to act by early 2026.
After missing the deadline earlier this year, the Trump administration asked the courts for an additional 18 months to review the remaining claims.
A district judge denied the request, and the decision was now affirmed by the 9th U.S. Circuit Court of Appeals, clearing the way for the loans to be discharged.
The Hill has reached out to the Education Department for comment.
The latest round of relief covers more than 170,000 borrowers, bringing the total value of the class-action settlement to approximately $23 billion for nearly 500,000 borrowers.
The lawsuit was filed in 2019 on behalf of borrowers who accused the Education Department of leaving borrower defense applications unresolved for years, despite allegations that schools had lured students with misleading claims about graduation outcomes, job placement and future earnings.
“At the end of the day, this settlement has impacted over 450,000 people, and it’s improved their personal balance sheets by over $23 billion,” Eileen Connor, the executive director of the Project on Predatory Student Lending (PPSL), said in a statement to NPR. PPSL is the advocacy group that filed the 2019 lawsuit against the department.
Education Department spokesperson Ellen Keast said in a statement to The New York Times that the original settlement “imposed an unrealistic deadline” on the department.
“The Department has complied in good faith with court orders,” she said, “and we believe the court erred in not granting our reasonable request.”
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