July Hearing for Borrower Defense Claims Settlement Delayed by Court

By Hugh T. Ferguson, NASFAA Senior Staff Reporter

A hearing to consider the Biden administration’s proposed borrower defense settlement that would discharge the loans of 200,000 borrowers who say they were defrauded by their institutions — originally scheduled for next week — has been delayed so the court can consider a pair of motions that seek to contest the agreement.

Since the Department of Education’s (ED) announcement of the proposed settlement and their ramped up efforts to process discharges, proprietary schools have urged the court to carefully consider the agreement and have filed motions to intervene in the case.

According to legal documents, the judge overseeing the court case — dubbed Sweet v. Cardona — will hear those arguments on August 4 and could also consider whether to grant preliminary approval of the settlement.

Correction 7/22/22: This article was updated to clarify that the borrowers whose loans may be discharged have claimed they were defrauded by their institutions. While this lawsuit concerns the adjudication and processing of pending borrower defense claims, it does not make a finding on the merit of those claims.


Publication Date: 7/21/2022

Jeff A | 7/21/2022 8:28:17 AM

Additionally, there are non profit schools that have petitioned the court. It is not just proprietary colleges.

Jeff A | 7/21/2022 8:26:10 AM

Most likely many of these borrowers weee not defrauded. And many more are simply closed school discharges, not fraud. And still more were already adjudicated to be without merit. It is inaccurate to represent that they were all defrauded. This is a political action that has already disrupted the integrity of the BDR process, unfortunately.

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