U.S. to cancel $6 billion in student loans for 200,000 defrauded borrowers

A graduate student waits to cross the street in Cambridge, Massachusetts, U.S., June 7, 2019. REUTERS/Brian Snyder/File Photo

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WASHINGTON, June 23 (Reuters) – The United States will cancel $6 billion in student loans for 200,000 borrowers who said they were defrauded by their universities, the administration of U.S. President Joe Biden said.

A settlement agreement between the borrowers and the US Department of Education was filed in US District Court for the Northern District of California on Wednesday and must be approved by a federal judge.

Canceling student debt has become a top priority for many liberals, and one that could boost popularity with younger, more educated voters, who lean towards the Democrats, ahead of November’s midterm legislative elections. Read more

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About 43 million Americans have federal student loan debt, according to educationdata.org.

These borrowers’ loans will be fully eliminated and any payments they made will be refunded, according to the court filing of the settlement agreement.

The Borrowers’ lawsuit had accused the administrations of Biden and former President Donald Trump of illegally delaying for years any action on applications the Borrowers had filed with the Department of Education for debt relief.

In a statement Thursday, Education Secretary Miguel Cardona called the settlement “fair and equitable to all parties” and said it would provide “billions of dollars in automatic relief” to the 200,000 borrowers .

The Project on Predatory Student Lending, which represents students across the United States in the fight against student debt, described the settlement as “momentary”.

The Biden administration previously approved $25 billion in student debt forgiveness for about 1.3 million borrowers.

The administration had been reluctant to proceed unilaterally with an unprecedented write-off of college debt held by the US government. The president had instead asked Congress to pass a bill canceling the debt that he could sign. Read more

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Reporting by Kanishka Singh and Chris Gallagher in Washington; edited by Jonathan Oatis, Doina Chiacu and Nick Zieminski

Our standards: The Thomson Reuters Trust Principles.

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