Supreme Court Allows $6 Billion in Student Loan Debt Forgiveness

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The US Supreme Court on Thursday allowed $6 billion in student loan forgiveness after it declined to intervene in a class action lawsuit.

The high court rejected a request by colleges challenging the case.

This case is not related to Joe Biden’s student loan forgiveness plan that is currently on hold and before the US Supreme Court justices awaiting a ruling.

The lawsuit could lead to the cancellation of more than 200,000 loans amid claims the borrowers were misled by the colleges.

NBC News reported:

A settlement that will allow thousands of student loan debts to be canceled will go into effect after the Supreme Court on Thursday declined to block it.

The Supreme Court in a brief order rejected a request made by colleges challenging the settlement.

The class-action settlement concerns loans that borrowers claim should be canceled because they were taken out based on misrepresentation made by their schools, many of which are for-profit. The settlement could be worth more than $6 billion.

The case arises from a settlement that California-based U.S. District Judge William Alsup approved in November in a case brought by borrowers. The government has already started implementing the settlement.

The application at the Supreme Court was filed by Everglades College, Lincoln Educational Services Corp. and American National University. Lincoln and American National are for-profit enterprises, while Everglades is not-for-profit. All three operate colleges the federal government placed on a list of more than 150 institutions that it said are linked with claims of “substantial misconduct.”