Do you remember when President Biden pledged to assist 55,000 students with their loan debt by January? Well, those students are still waiting, and now they are taking the government to court.
Individuals who took out loans for cars, homes, dental work, or home repairs were expecting their student debt to be eliminated, providing much-needed relief. However, that hasn’t been the case for them yet.
These individuals have taken action by filing a legal motion in a federal court in San Francisco. Their demand is simple—they want the Education Department to fulfill its promise and eliminate their debt promptly.
This stems from a longstanding lawsuit known as Sweet v. Cardona, involving approximately 300,000 students defrauded by their institutions. Initially, the government committed to wiping away the debts of 195,000 of these students by January 28th. Unfortunately, the Biden administration has yet to deliver relief to at least 55,000 of them, leaving many uncertain whether their debt will indeed be cancelled.
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Months of discussions between the government and students’ attorneys have resulted in frustration, as the former cannot provide a firm deadline for clearing all affected debts. According to Eileen Connor, a lawyer working with students dealing with predatory lending practices, “We’re tired of waiting around with no clear plan… We’re hopeful that the court can push the Education Department to give us some answers.” She further warns, “if the government continues to miss deadlines, they may face consequences.”
President Biden Discusses Debt Relief Plans
During a recent speech, President Biden discussed his intentions to support students burdened with educational debt. To date, his administration has already forgiven $138 billion for roughly four million borrowers. Despite these efforts, numerous students are still awaiting assistance.
Of particular concern are the cases of 1.3 million students who were deceived by their colleges and universities. Although the legal motion indicates that progress has been made, several students within this group remain without resolution regarding their outstanding balances.
Challenges faced by the Education Department include complications arising from private entities managing student loans, as well as difficulties encountered by the Office of Federal Student Aid responsible for processing applications and granting approvals.
Connor commented on the situation stating, “it does not appear that the Education Department is moving quickly enough to help us,” adding, “this is a court order; they can’t simply disregard it.”
Background on the Legal Case
The origin of this issue dates back to 2019 during the tenure of Secretary of Education Betsy DeVos. At that time, multiple students initiated litigation against the department alleging mistreatment and unjust handling of loan cancellation processes based on school misconduct.
A regulation exists whereby students defrauded by their education institution can request loan debt elimination. This process remained largely untapped until 2015 when Corinthian Colleges, a large for-profit entity, declared bankruptcy after accusations of false advertising and inflated job placement statistics designed to encourage student enrollment and subsequent loan acquisition.
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Under the Obama Administration, measures were implemented to streamline the application process for distressed students seeking debt cancellation due to institutional deceit. During the Trump Administration, however, such claims were delayed significantly, leading to increased frustration among impacted students and eventually resulting in the current lawsuit.
As part of the settlement reached in 2022 under the new administration, students who submitted claims prior to June 22nd, 2022, and attended one of 150 listed schools were expected to have their debt cleared by January 28th, 2024. Regrettably, this timeline appears insufficient for certain individuals, causing significant distress and uncertainty.
