Supreme Court Allows Loan Discharge for Students Misled by For-Profit Colleges

Case isn't related to challenge to Biden’s broad student loan forgiveness program

By
Diccon Hyatt
Diccon Hyatt
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Diccon Hyatt is an experienced financial and economics reporter who has covered the pandemic-era economy in hundreds of stories over the past two years. He's written hundreds of stories breaking down complex financial topics in plainspoken language, emphasizing the impact that economic currents would have on individuals' finances and the market. He's also worked at The Balance, U.S. 1, Community News Service and the Middletown Transcript.
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Published April 13, 2023
Tourists move through the plaza in front of the U.S. Supreme Court building April 07, 2023 in Washington, DC. According to a ProPublica report published Thursday, Supreme Court Associate Justice Clarence Thomas failed to include in his financial disclosures that for decades he was treated to luxury vacations by Texas real estate magnate and Republican mega-donor Harlan Crow.

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The Supreme Court declined to block a $6 billion settlement canceling student loan debts for some borrowers who said they were misled by for-profit colleges.

The court denied a request by Everglades College, Lincoln Educational Services Corporation and American National University to block the settlement of a class-action lawsuit against the Department of Education from fully going into effect.

A group of student loan borrowers sued the Department of Education in 2019, under the Trump administration, saying their borrower defense claims against colleges weren't being processed. Students had filed claims under federal regulations that allow loan debt to be discharged in cases of fraud, alleging the colleges they attended had falsely advertised or otherwise misled them.

The department, under President Joe Biden, settled with the students in 2022, agreeing to forgive $6 billionof student loans for some 290,000 borrowers. 

The settlement included a list of colleges, mostly for-profit schools, whose students could have their loans forgiven. 

The case isn't related to Biden’s sweeping $20,000-per-borrower forgiveness of federally-held student loans, which the Supreme Court is considering. A decision in that case is expected by June.

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  1. Supreme Court. "Order in Pending Case Everglades College vs. Cardona."

  2. District Court of Northern California. "Sweet vs. DeVos."

  3. Project on Predatory Student Lending. "Student Borrowers Win Another Victory in Sweet v. Cardona as Supreme Court Denies Intervenors’ SCOTUS Petition Attempting to Stop Settlement ."

  4. Federal Student Aid. "Sweet v. Cardona Settlement Agreement Exhibit C."

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